Chilly Weather Ignites Natural Gas Market Buzz
The natural gas market experienced a notable surge on Wednesday, with prices climbing by 3.20%. This increase was primarily driven by forecasts of colder-than-average temperatures sweeping across the US, particularly in the Northeast and Great Lakes regions. The chillier weather is expected to persist through the end of the week and return mid-month, prompting investors to place significant bets on natural gas futures.
Production and Demand
- Current Production: The US is generating around 112.0 billion cubic feet of dry gas per day, marking a 6.4% increase compared to last year.
- Current Demand: Demand stands at 113.1 billion cubic feet per day, up 2.6% from the previous year.
- LNG Exports: Net flows to export terminals are at 17.5 billion cubic feet per day, down 4.9% from the previous week.
Electricity Output
Electricity production in the US has been on an upward trajectory, potentially supporting gas prices:
- Week Ending November 29: Increased by 2.11% year-over-year.
- Past 52 Weeks: Output has grown by 2.99%, reaching a total of 4,289,746 gigawatt hours.
Challenges Ahead
Despite the positive outlook, there are factors that could put downward pressure on prices:
- EIA Forecast: The Energy Information Administration (EIA) has raised its forecast for 2025 US natural gas production, predicting a 1.0% increase to 107.67 billion cubic feet per day.
- Active Gas Rigs: A recent two-year high in active gas rigs could further impact prices.
Weekly EIA Report
Market watchers are anticipating a draw of 18 billion cubic feet in the weekly EIA natural gas inventories report for the week ended November 28. The previous week's report showed a draw of 11 billion cubic feet, which was larger than expected but still less than the five-year average.
European Gas Storage
In Europe, gas storage levels are currently at 75% full, which is lower than the five-year seasonal average of 85% for this time of year. This could indicate tighter supplies in the region.
