December Nymex natural gas (NGZ23) on Friday closed down -0.042 (-1.45%).
Nat gas prices fell to a 2-month near futures low on Friday and closed moderately lower on the outlook for warmer US temperatures to reduce heating demand for nat gas. The Commodity Weather Group said most of the U.S. is seeing warmer weather forecast for Nov. 29 through Dec. 3, with faster rewarming for the eastern half of the U.S. than previously expected.
Lower-48 state dry gas production on Friday was 105.4 bcf/day (+4.5% y/y), according to BNEF. Lower-48 state gas demand on Friday was 91.6 bcf/day (+24.2% y/y), according to BNEF. LNG net flows to US LNG export terminals on Friday were 14.8 bcf/day (+8.3% w/w), according to BNEF.
High inventories caused by carryover from the mild winter of 2022/23 and weak heating demand have depressed natural gas prices. Gas storage across Europe was 99% full on November 19, above the 5-year seasonal average of 88% full for this time of year. US nat gas inventories as of November 17 were +7.0% above their 5-year seasonal average.
A decline in US power generation is bearish for natural gas demand from utility providers. The Edison Electric Institute reported on Wednesday that total US electricity production in the week ended November 18 fell -8.3% y/y to 70,318 GWh (gigawatt hours), and the massive US electricity production in the 52-week period ending on November 18 fell -0.7% y/y to 4,091,924 GWh.
Wednesday’s weekly EIA report was bullish for nat gas prices as nat gas inventories for the week ended Nov. 17 unexpectedly fell -7 bcf against expectations of a +3 bcf increase, albeit a smaller draw than the 5- annual average of -53 bcf. . As of November 17th, nat gas inventories grew +7.4% y/y and were +7.0% above their 5-year seasonal average, signaling ample nat gas supplies.
Baker Hughes reported on Wednesday that the number of active US natural gas rigs in the week ended November 24 rose +3 rigs to 117 rigs, just above the 19-month low of 113 rigs posted on 8- an of September Active platforms this year fell back. after climbing to a 4-year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in Jul 2020 (data since 1987).
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