Record Drawdown in US Nat-Gas Inventories Lifts Prices

Core Insights - Natural gas prices increased due to a record withdrawal from storage, with inventories dropping by 360 billion cubic feet (bcf) for the week ending January 30, significantly exceeding the five-year average of 190 bcf [1][7] - Expectations of colder temperatures in the US are likely to boost heating demand for natural gas, although forecasts of warmer weather later in February may temper price increases [2] - A recent storm and cold weather caused disruptions in natural gas production, leading to a significant drop in output, with about 50 bcf offline, representing 15% of total US production [3] Production and Demand - US dry gas production was reported at 112.5 bcf/day, reflecting a year-over-year increase of 5.9%, while demand reached 114.2 bcf/day, up 15.7% year-over-year [4] - The EIA has revised its forecast for US dry natural gas production in 2026 down to 107.4 bcf/day, indicating potential support for higher prices as current production is near record levels [5] Electricity Output - The Edison Electric Institute reported a year-over-year increase in US electricity output of 21.4% to 99,925 GWh for the week ending January 31, which may further support natural gas prices [6] Inventory Levels - The latest EIA report indicated that natural gas inventories were up 2.8% year-over-year but 1.1% below the five-year seasonal average, suggesting tighter supply conditions [7]