Nat-Gas Prices Recover on Cold US Weather

November Nymex natural gas (NGX24) on Tuesday closed up by +0.004 (+0.16%).

Nov nat-gas prices Tuesday recovered from a 1-month nearest-futures low and posted modest gains.   Short covering emerged in nat-gas futures Tuesday to push prices higher on forecasts for below-normal temperatures in the central and eastern US this week, which will boost heating demand for nat-gas.  Prices on Tuesday initially moved lower after NatGasWeather predicted warmer-than-normal weather for most of the US from October 18-29.  

Lower-48 state dry gas production Tuesday was 101.1 bcf/day (-2.7% y/y), according to BNEF.  Lower-48 state gas demand Tuesday was 72.1 bcf/day (+4.7% y/y), according to BNEF.  LNG net flows to US LNG export terminals Tuesday were 13.4 bcf/day (+6.1% 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 electricity output in the week ended October 5 rose +3.58% y/y to 78,680 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 5 28 rose +1.48% y/y to 4,154,306 GWh.

Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended October 4 rose +82 bcf, higher than expectations of +71 but below the 5-year average build for this time of year of +96 bcf.  As of October 4, nat-gas inventories were up +2.8% y/y and were +5.1% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 95% full as of October 13, above the 5-year seasonal average of 92% 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 October 11 fell by -1 rig to 101 rigs, modestly above the 3-1/3 year low from September 6 of 94 rigs.  Active rigs have fallen since posting a 5-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).
 

More Natural Gas News from Barchart

• Nat-Gas Prices Tumble as US Weather Forecasts Warm
• Nat-Gas Prices Retreat as Power Outages Persist in Florida
• Nat-Gas Prices Rebound as US Weather Forecasts Cool
• Nat-Gas Prices Fall on Demand Concerns From Warm Fall Temps

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. For more information please view the Barchart Disclosure Policy here.