Nat-Gas Prices Rally on Colder US Forecasts for Early-January

Core Insights - January Nymex natural gas prices increased by 2.92% due to colder forecasts for early January, particularly from December 31 to January 4 across the North and West regions [1] Production and Inventory - The EIA has rescheduled the inventory report to December 29, with a market consensus predicting a decline of 169 billion cubic feet (bcf), which is larger than the 5-year average decline of 110 bcf [2] - 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 [3] - As of December 9, US (lower-48) dry gas production was 113.2 bcf/day, reflecting a year-over-year increase of 7.9%, while gas demand was 87.5 bcf/day, down 3.2% year-over-year [4] Market Dynamics - Estimated LNG net flows to US export terminals were stable at 19.1 bcf/day [4] - The Edison Electric Institute reported a year-over-year increase in US electricity output of 2.3% for the week ending December 6, contributing positively to gas prices [4] - Recent EIA reports indicated a smaller-than-expected draw in natural gas inventories, with a decrease of 167 bcf, compared to a consensus of 176 bcf, but still larger than the 5-year average of 96 bcf [4] Drilling Activity - The number of active US natural gas drilling rigs remained unchanged at 127, just below the 2.25-year high of 130 [5] - The count of gas rigs has increased from a 4.5-year low of 94 rigs reported in September 2024 [5]