Nat-Gas Prices Soar as Frigid US Temps to Persist

Core Insights - Natural gas prices surged to a nearly 3-year high due to forecasts of frigid temperatures in the US, which are expected to increase heating demand [2] - US dry gas production reached 111.7 billion cubic feet per day (bcf/day), marking a 7.2% year-over-year increase, while gas demand slightly decreased to 113.3 bcf/day, down 1.2% year-over-year [3] - The number of active US natural gas drilling rigs decreased to 129, just below a recent high, indicating a potential slowdown in production growth [7] Price Dynamics - January natural gas prices closed up sharply by 4.46% on Friday, reflecting strong market reactions to weather forecasts [1] - The Edison Electric Institute reported a 2.11% year-over-year increase in US electricity output, which supports higher natural gas prices due to increased demand for gas-fired power generation [4] Supply and Demand Factors - The EIA raised its forecast for US natural gas production in 2025 to 107.67 bcf/day, indicating a continued trend of high production levels [5] - Natural gas inventories showed a smaller-than-expected draw of 12 bcf, which is less than the market consensus and the 5-year average, suggesting adequate supply levels [6] Market Trends - European gas storage levels were reported at 74% full, compared to a 5-year seasonal average of 84%, indicating potential supply concerns in the European market [6] - The number of active natural gas rigs has increased from a 4.5-year low of 94 rigs in September 2024, reflecting a recovery in drilling activity [7]