March Nymex natural gas (NGH24) on Wednesday closed -0.080 (-4.74%).

Nat-gas prices on Wednesday sank to a new 3-1/2 year nearest-futures low, and prices have fallen for seven consecutive sessions.  Nat-gas prices have retreated over the past five weeks on above-normal U.S. winter temperatures, which have curbed heating demand for nat-gas and kept inventories high.  Forecaster Maxar Technologies said Wednesday that above-average temperatures will likely continue for most of the U.S. for the rest of February.

Nat-gas prices are also under pressure after the Freeport LNG nat-gas export terminal in Texas said on January 26 that it shut down one of its three production units for a month for repairs after extreme cold in Texas damaged equipment.  Closing one of the units will limit U.S. nat-gas exports and increase U.S. nat-gas inventories.

Lower-48 state dry gas production Wednesday was 103.3 bcf/day (+3.3% y/y), according to BNEF.  Lower-48 state gas demand Wednesday was 94.1 bcf/day (+13.4% y/y), according to BNEF.  LNG net flows to U.S. LNG export terminals Wednesday were 13.7 bcf/day (+4.9% w/w), according to BNEF.

The U.S. Climate Prediction Center said there is a greater than 55% chance the current El Nino weather pattern will remain strong in the Northern Hemisphere through March, keeping temperatures above average and weighing on nat-gas prices.  AccuWeather said El Nino will limit snowfall across Canada this season in addition to causing above-normal temperatures across North America.

An increase in U.S. electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended February 10 rose +0.4% y/y to 75,587 GWh (gigawatt hours), although cumulative U.S. electricity output in the 52-week period ending February 10 fell -0.3% y/y to 4,099,349 GWh.

The consensus is for Thursday's EIA nat-gas inventories to fall by -65 bcf, a much smaller draw than the five-year average for this time of year of -149 bcf.

Last Thursday's weekly EIA report was neutral to slightly bearish for nat-gas prices as nat-gas inventories for the week ended February 2 fell -75 bcf, right on expectations but a much smaller draw than the five-year average for this time of year at -193 bcf.  As of February 2, nat-gas inventories were up +9.2% y/y and were +10.6% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 67% full as of February 12, above the 5-year seasonal average of 51% full for this time of year.

Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ending February 9 rose +4 rigs to a 5-month high of 121 rigs, moderately above the 2-year low of 113 rigs posted September 8.  Active rigs have fallen back since climbing to a 4-1/2 year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
 



More Natural Gas News from
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  • Nat-Gas Prices Post 3-1/2 Year Low on Warm U.S. Winter Temps
  • Nat-Gas Prices Slump to 3-Year Low on Ample U.S. Supplies

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