January Nymex natural gas (NGF25) on Monday closed sharply lower by -0.150 (-4.46%)

Jan nat-gas prices Monday tumbled to a 1-1/2 week low and closed sharply lower as forecasts for the southern two-thirds of the US showed milder weather toward the middle of this month, which will curb heating demand for nat-gas.  On Monday, forecaster NatGasWeather said current below-normal temperatures in the eastern half of the US will warm to near normal this weekend and that forecasts have trended warmer into the middle of this month for most of the southern two-thirds of the US.  

Warmer winter temperatures could keep US nat-gas supplies elevated, a bearish price factor.  US nat-gas inventories as of November 22 are +7.2% above their 5-year seasonal average for this time of year, signaling ample nat-gas supplies.  

Lower-48 state dry gas production Monday was 104.5 bcf/day (-1.2% y/y), according to BNEF.  Lower-48 state gas demand Monday was 106.8 bcf/day (+29.1% y/y), according to BNEF.  LNG net flows to US LNG export terminals Monday were 14.2 bcf/day (+8.7% w/w), according to BNEF.

An increase in US electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported last Wednesday that total US (lower-48) electricity output in the week ended November 23 rose +3.86% y/y to 73,873 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 23 rose +1.91% y/y to 4,168,195 GWh.

Last Wednesday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 22 fell -2 bcf versus expectations of -3 bcf and well above the 5-year average draw for this time of year of -30 bcf.  As of November 22, nat-gas inventories were up +3.4% y/y and were +7.2% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 87% full as of November 25,  below the 5-year seasonal average of 89% full for this time of year.

Baker Hughes reported last Wednesday that the number of active US nat-gas drilling rigs in the week ending November 29 rose +1 rig to 100 rigs, modestly above the 3-1/2 year low from September 6 of 94 rigs.  Active rigs have fallen since posting a 5-1/4 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).