On Thursday, January Nymex natural gas (NGF26) closed down by $0.116, a decline of 2.88%, following a weaker-than-expected EIA storage report showing a draw of 167 billion cubic feet (bcf) for the week ending December 12, compared to the anticipated 176 bcf. Natural gas prices had initially risen due to forecasts of below-normal temperatures in the Eastern U.S. set for December 28-January 1.
As of December 12, U.S. natural gas inventories were down 1.2% year-on-year but were 0.9% above the 5-year seasonal average. Concurrently, U.S. dry gas production was reported at 112.9 bcf/day, an 8.8% increase year-on-year. The number of active U.S. natural gas drilling rigs fell by 2 to 127 rigs for the week ending December 12, just below the 130-rig high recorded on November 28.
Looking at broader trends, the Edison Electric Institute reported a 2.3% year-on-year increase in U.S. electricity output for the week ending December 6, reaching 85,330 GWh. However, lower demand for natural gas, estimated at 90.9 bcf/day (-4.4% year-on-year), and reduced LNG net flows to U.S. export terminals (17.5 bcf/day, down 3.6% w/w) have exerted downward pressure on prices.
