January Nymex natural gas (NGF25) on Friday closed lower by -0.003 (-0.10%)

Jan nat-gas prices on Friday closed slightly lower and were under pressure after forecasts for the northern part of the US turned warmer for later in December, which could curb heating demand for nat-gas.  The Commodity Weather Group said Friday that forecasts shifted warmer for much of the northern part of the US and Texas for December 16-20.  

Carryover weakness from a slide in European gas prices to a 1-week low Friday also weighed on US nat-gas prices after Russian President Putin changed the way foreign buyers of Russian gas have to pay for supplies.  Russia will now allow money transfers via third parties, easing concerns that US sanctions imposed on Gazprombank last month will lead to a halt of Russian gas supplies to Europe.

Warmer winter temperatures could keep US nat-gas supplies elevated, a bearish price factor.  US nat-gas inventories as of November 29 are +7.8% above their 5-year seasonal average for this time of year, signaling ample nat-gas supplies.  

Lower-48 state dry gas production Friday was 104.3 bcf/day (-0.3% y/y), according to BNEF.  Lower-48 state gas demand Friday was 110 bcf/day (+13.1% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 14.1 bcf/day (-0.9% w/w), according to BNEF.

A decline in US electricity output is negative for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended November 30 fell -3.94% y/y to 74,881 GWh (gigawatt hours), although US electricity output in the 52-week period ending November 30 rose +1.76% y/y to 4,165,120 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 29 fell -30 bcf versus expectations of -36 bcf and less than the 5-year average draw for this time of year of -47 bcf.  As of November 22, nat-gas inventories were up +5.9% y/y and were +7.8% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 84% full as of December 3,  below the 5-year seasonal average of 86% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending December 6 rose +2 rigs to 102 rigs, modestly above the 3-1/2 year low from September 6 of 94 rigs.  Active rigs have fallen since posting a 5-1/4 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).