The EIA said last week that its weekly storage report was rescheduled from December 24 to December 29 at 17:00 GMT due to the Christmas holiday. Pre-report consensus estimates are calling for a decline of 169 Bcf, which would be a larger drop than the 5-year average for the week of -110. As of December 12, natural gas inventories were down 1.2% y/y and were +0.9% above their 5-year seasonal average, signaling adequate natural gas supplies.
Production Remains Elevated Despite Bearish Fundamentals
In addition to the EIA storage report and weather forecast, natural gas traders were also eyeing production numbers. U.S. (lower-48) dry gas production stands at 113.2 Bcf/day as of Friday, putting it up 7.9% for the year.
This daily figure aligns with the EIA forecast from December 9, which raised the estimate for 2025 U.S. natural gas production to 107.74 Bcf/day, up from its November estimate of 107.70 Bcf/day. Production is currently near a record high, with active rigs recently posting a 2-year high, according to Baker Hughes.
On Tuesday, Baker Hughes reported that the number of active natural gas drilling rigs in the week-ending December 26 remained unchanged at 127, a little below the 2.25-year high of 130 reached on November 28. The number of gas rigs in 2025 is set to finish the year higher, rebounding from a 4.5-year low of 94 rigs reported in September 2024.
Demand Picture Shows Mixed Signals
On the demand side, lower-48 gas demand on Friday was 87.5 Bcf/day (-3.2% annually), according to BNEF (BloombergNEF). BNEF also estimated LNG net flows to U.S. LNG export terminals on Friday at 19.1 Bcf/day or unchanged for the week.
LNG demand may have also been impacted by the news that as of December 17, gas storage in Europe was 68% full, compared to the 5-year seasonal average of 78% full for this time of year. This below-average storage level suggests Europe may need to increase imports, potentially supporting U.S. LNG export demand.