February Nymex natural gas (NGG25) on Tuesday closed down sharply by -0.192 (-4.86%).

Feb nat-gas prices Tuesday tumbled to a 1-week low as weather forecasts shifted warmer for the eastern and central parts of the US for late January and early February, which will reduce heating demand for nat-gas.  Forecaster Maxar Technologies said Tuesday that forecasts moved warmer for most of the central and eastern US for January 31-February 4.  

Last Monday, nat-gas prices soared to a 1-year nearest-futures high as an arctic blast sent temperatures plunging across the US, leading to a surge in heating demand and reducing inventories.  The EIA reported last Thursday that nat gas inventories for the week ended January 10 fell -258 bcf, a much larger draw than the five-year average for this time of year of -128 bcf.  

Lower-48 state dry gas production Tuesday was 99.4 bcf/day (-2.0% y/y), according to BNEF.  Lower-48 state gas demand Tuesday was 136.8 bcf/day (+13.3% y/y), according to BNEF.  LNG net flows to US LNG export terminals Tuesday were 13.1 bcf/day (-5.7% w/w), according to BNEF.

An increase in US electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported last Wednesday that total US (lower-48) electricity output in the week ended January 11 rose +10.61% y/y to 91,182 GWh (gigawatt hours), and US electricity output in the 52-week period ending January 11 rose +2.46% y/y to 4,188,244 GWh.

Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended January 10 fell -258 bcf, close to expectations of -260 but a much bigger draw than the 5-year average draw for this time of year of -128 bcf.  As of January 10, nat-gas inventories were up +2.1% y/y and were +2.5% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 60% full as of January 19, below the 5-year seasonal average of 68% full for this time of year.

Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending January 17 fell -2 to 98 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).