Nymex natural gas futures for February (NGG26) closed down 6.99% on Friday, losing $0.238 and reaching a 2.5-month low. The decline is attributed to forecasts of warmer temperatures across the U.S. from January 9-23, which are expected to reduce heating demand and allow for a rebuilding of storage levels.
As of January 6, U.S. dry gas production was reported at 113.5 billion cubic feet per day (bcf/day), marking a 10.7% year-over-year increase, while demand dropped to 87.9 bcf/day, a decrease of 28.1% year-over-year. The Energy Information Administration’s recent report indicated a rise in expected U.S. natural gas production for 2025 to 107.74 bcf/day, contributing to bearish market conditions.
Additionally, the number of active natural gas drilling rigs in the U.S. fell by one to 124 for the week ending January 9, slightly below a recent high of 130. This is an increase from the 4.5-year low of 94 rigs reported in September 2024.
