Natural gas prices settled down by -1.82%, closing at 151, as a surge in production, mild winter weather, and recent LNG export plant outages weighed on demand. Analysts anticipate that some producers may curtail gas drilling activities in response to the challenging market conditions. The gas rig count experienced a 23% decline in 2023, leaving only 120 rigs in service, with an additional three rigs taken offline so far this year, according to Baker Hughes. The U.S. Energy Information Administration (EIA) reported that utilities withdrew 75 billion cubic feet (bcf) of gas from storage during the week ended Feb. 2.
This withdrawal aligns with analysts’ expectations, but it is significantly lower than the 208 bcf decrease recorded in the same week last year and the five-year average decline of 193 bcf for this time of year. LSEG noted that gas output in the U.S. Lower 48 states increased to an average of 105.6 bcfd in February from 102.1 bcfd in January, though it remains below the record high of 106.3 bcfd in December. Meteorologists project warmer-than-normal temperatures in the Lower 48 states through Feb. 15 before a shift to mostly near- to below-normal levels from Feb. 16-23.
From a technical standpoint, the market is experiencing fresh selling, with a 1.11% increase in open interest, settling at 76,020. Prices declined by -2.8 rupees. Natural gas is currently supported at 148.8, with a potential test of 146.5 if breached. On the upside, resistance is likely at 154.6, and a move above could lead to testing 158.1.