February Nymex natural gas (NGG25) on Monday closed down sharply by -0.330 (-8.19%).

Feb nat-gas prices Monday plummeted to a 2-week low and closed sharply lower.  The outlook for warmer US temperatures early next month that will reduce heating demand for nat-gas hammered prices Monday when the Commodity Weather Group said that forecasts moved warmer for the central part of the US  for February 1-5.  

Earlier this month, 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.

Lower-48 state dry gas production Monday was 104 bcf/day (+0.1% y/y), according to BNEF.  Lower-48 state gas demand Monday was 110.8 bcf/day (+25% y/y), according to BNEF.  LNG net flows to US LNG export terminals Monday were 14.5 bcf/day (+4.7% w/w), according to BNEF.

A decrease in US electricity output is negative for nat-gas demand from utility providers.  The Edison Electric Institute reported last Thursday that total US (lower-48) electricity output in the week ended January 18 fell -7.35% y/y to 87,343 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 18 rose +1.86% y/y to 4,181,320 GWh.

Last Thursday's weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended January 17 fell -223 bcf, a smaller draw than expectations of -247 but a much bigger draw than the 5-year average draw for this time of year of -167 bcf.  As of January 17, nat-gas inventories were up +1.3% y/y and were +0.7% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 59% full as of January 20, below the 5-year seasonal average of 67% 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 24 rose +1 to 99 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).