Nat-Gas Prices Fall on a Mixed US Weather Forecast and Record-High Output

NG=F +0.94%

December Nymex natural gas (NGZ25) on Monday closed down by -0.031 (-0.68%).

Dec nat-gas prices settled lower on Monday due to a mixed US weather forecast, potentially curbing nat-gas heating demand.  Forecaster Atmospheric G2 said Monday that forecasts shifted colder across the eastern two-thirds of the US for November 29-December 3, but warmer in the Southeast and West.  Also, record-high US nat-gas production weighed on prices after BNEF data showed that lower-48 nat-gas production rose to a record 112.2 bcf/day on Monday.

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Higher US nat-gas production is a bearish factor for prices.  On November 12, the EIA raised its forecast for 2025 US nat-gas production by +1.0% to 107.67 bcf/day from September's estimate of 106.60 bcf/day.  US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.

US (lower-48) dry gas production on Monday was 112.2 bcf/day (+8.3% y/y), according to BNEF.  Lower-48 state gas demand on Monday was 83.1 bcf/day (+4.9% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Monday were 17.7 bcf/day (+0.2% w/w), according to BNEF.

As a supportive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended November 15 rose +5.33% y/y to 75,586 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 15 rose +2.9% y/y to 4,286,124 GWh.

Last Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended November 14 fell by -14 bcf, a larger draw than the market consensus of -12 bcf and well below the 5-year weekly average of a +12 bcf increase.  As of November 14, nat-gas inventories were down -0.6% y/y and were +3.8% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of November 18, gas storage in Europe was 81% full, compared to the 5-year seasonal average of 90% full for this time of year.

Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending November 21 rose by +2 to 127 rigs, just below the 2.25-year high of 128 rigs from November 7.  In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com