Nat-Gas Prices Hammered by Forecasts for Above-Average US Temps

January Nymex pure gasoline (NGF26) on Friday closed down by -0.118 (-2.79%).

Jan nat-gas costs prolonged this week’s sharp sell-off on Friday, sinking to a 6-week low.   US climate forecasts calling for warmer-than-normal temperatures throughout a big a part of the nation will probably cut back heating demand and have sparked lengthy liquidation pressures in nat-gas futures.  Forecaster Atmospheric G2 stated Friday that above-normal temperatures are forecast to develop over the western, central, and southern US for December 17-21, and widespread above-average heat is forecast over the southern half of the nation for December 22-26.  

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Larger US nat-gas manufacturing can be bearish for costs.  On Tuesday, the EIA raised its forecast for 2025 US nat-gas manufacturing to 107.74 bcf/day from its November estimate of 107.70 bcf/day.  US nat-gas manufacturing is presently close to a file excessive, with energetic US nat-gas rigs lately posting a 2-year excessive.

Final Friday, nat-ga costs rallied to an almost 3-year nearest-futures excessive as late-autumn temperatures have remained properly under regular and are anticipated to persist within the close to time period, boosting heating demand and shrinking nat-gas storage ranges.  

US (lower-48) dry gasoline manufacturing on Friday was 112.5 bcf/day (+7.1% y/y), based on BNEF.  Decrease-48 state gasoline demand on Friday was 110.6 bcf/day (-3.4% y/y), based on BNEF.  Estimated LNG internet flows to US LNG export terminals on Friday had been 18.1 bcf/day (-3.0% w/w), based on BNEF.

As a supportive issue for gasoline costs, the Edison Electrical Institute reported Wednesday that US (lower-48) electrical energy output within the week ended December 6 rose +2.3% y/y to 85,330 GWh (gigawatt hours), and US electrical energy output within the 52-week interval ending December 6 rose +2.84% y/y to 4,291,665 GWh.

Thursday’s weekly EIA report was bullish for nat-gas costs, as nat-gas inventories for the week ended December 5 fell by -177 bcf, a bigger draw than the market consensus of -170 bcf and than the 5-year weekly common of -89 bcf.  As of December 5, nat-gas inventories had been down unchanged y/y and had been +2.8% above their 5-year seasonal common, signaling ample nat-gas provides.  As of December 10, gasoline storage in Europe was 71% full, in comparison with the 5-year seasonal common of 81% full for this time of yr.

Baker Hughes reported Friday that the variety of energetic US nat-gas drilling rigs within the week ending December 12 fell by -2 to 127 rigs, slightly below the two.25-year excessive of 130 rigs set on November 28.  Up to now yr, the variety of gasoline rigs has risen from the 4.5-year low of 94 rigs reported in September 2024. 

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