Nat-Gas Prices Retreat on Warmer US Weather Forecasts

Core Insights - December Nymex natural gas prices closed down by -0.125 (-2.75%) due to warmer weather forecasts and the liquidation of futures contracts [1] Group 1: Weather and Demand Factors - Warmer US weather forecasts for December 5-9 are expected to reduce natural gas heating demand [1] - Expectations of a smaller weekly EIA storage draw, with a consensus of a -9 bcf draw compared to the five-year average of -25 bcf, are negatively impacting gas prices [2] Group 2: Production and Supply Factors - Higher US natural gas production is a bearish factor, with the EIA raising its 2025 production forecast by +1.0% to 107.67 bcf/day [3] - US (lower-48) dry gas production was reported at 111.2 bcf/day (+6.7% y/y), while gas demand was at 82.0 bcf/day (-1.5% y/y) [4] Group 3: Inventory and Market Dynamics - The weekly EIA report indicated a larger-than-expected draw of -14 bcf in inventories, compared to the market consensus of -12 bcf, signaling adequate supplies [6] - As of November 22, European gas storage was 79% full, below the five-year seasonal average of 89% [6] Group 4: Rig Count and Industry Activity - The number of active US natural gas drilling rigs rose by +2 to 127 rigs, nearing a 2.25-year high [7]