Nat-Gas Prices Sink on Warm US Weather Forecasts

Core Insights - Natural gas prices have declined significantly, with February Nymex natural gas closing down 6.99%, reaching a 2.5-month low due to forecasts of warmer weather in the US that will reduce heating demand and allow for storage replenishment [1] Production and Demand - US natural gas production is at a near-record high, with the EIA raising its 2025 production forecast to 107.74 billion cubic feet per day (bcf/day) from 107.70 bcf/day [2] - Dry gas production in the lower 48 states was reported at 113.5 bcf/day, reflecting a year-over-year increase of 10.7%, while gas demand decreased to 87.9 bcf/day, down 28.1% year-over-year [3] Inventory and Storage - The EIA reported a significant draw in natural gas inventories, with a reduction of 119 bcf for the week ending January 2, exceeding market expectations and the 5-year average draw [5] - As of January 6, European gas storage was 58% full, compared to a 5-year seasonal average of 72% [5] Rig Count - The number of active US natural gas drilling rigs decreased by one to 124 rigs, slightly below the recent high of 130 rigs, which was reached on November 28 [6]