Nat-Gas Prices Drop on a Smaller-Than-Forecast Draw in Weekly Storage

Core Insights - Natural gas prices experienced a decline, closing down by 2.88% on January Nymex due to a smaller-than-expected draw in inventories [1] - The EIA reported a draw of 167 billion cubic feet (bcf) for the week ending December 12, which was less than the anticipated 176 bcf [2][7] - Despite initial gains driven by forecasts of below-normal temperatures in the eastern US, prices fell sharply after the EIA report [2] Production and Demand - US natural gas production is at a near-record high, with the EIA raising its 2025 production forecast to 107.74 bcf/day from 107.70 bcf/day [4] - Dry gas production in the lower 48 states was reported at 112.9 bcf/day, reflecting an 8.8% year-over-year increase [5] - Demand for natural gas in the lower 48 states decreased to 90.9 bcf/day, down 4.4% year-over-year [5] Storage and Supply - Natural gas inventories were down 1.2% year-over-year as of December 12, but were 0.9% above the 5-year seasonal average, indicating adequate supply [7] - European gas storage was reported to be 69% full as of December 16, compared to a 5-year seasonal average of 78% [7] Market Dynamics - Warmer weather in the US has led to reduced heating demand, contributing to a decline in natural gas prices since reaching a 3-year high on December 5 [3] - The Edison Electric Institute reported a year-over-year increase in US electricity output, which may support gas prices [6]