Nat-Gas Prices Plunge on Above-Normal US Weather Forecasts

November Nymex natural gas (NGX24) on Wednesday closed down by -0.131 (-5.24%).

Nov nat-gas prices Wednesday sold off sharply to a 1-month nearest-futures low on forecasts for mild US autumn weather, which will reduce heating demand for nat-gas.  Forecaster Atmospheric G2 said Wednesday that weather models have shifted to above-normal temperatures for most of the US from October 21-25.

Lower-48 state dry gas production Wednesday was 100.9 bcf/day (-2.8% y/y), according to BNEF.  Lower-48 state gas demand Wednesday was 76 bcf/day (+3.7% y/y), according to BNEF.  LNG net flows to US LNG export terminals Wednesday were 13.2 bcf/day (+6.2% 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.

The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +76 bcf, below the 5-year average for this time of year of +96 bcf.

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 Recover on Cold US Weather
• 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

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.