June Nymex natural gas (NGM24) on Thursday closed down -0.185 (-6.51%).
June nat-gas prices Thursday fell back from a 4-1/4 month nearest-futures high and closed sharply lower. Nat-gas prices on Thursday initially moved higher after the weekly EIA nat-gas inventories rose +78 bcf, below expectations of +85 bcf. However, technical selling emerged when several indicators showed prices became overbought due to this week's sharp rally, which sparked fund liquidation, and nat-gas prices retreated.
Lower-48 state dry gas production Thursday was 98.9 bcf/day (-1.3% y/y), according to BNEF. Lower-48 state gas demand Thursday was 65.8 bcf/day (+2.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 12.9 bcf/day (+2.6% w/w), according to BNEF.
Nat-gas prices have rebounded higher from the 3-3/4 year nearest-futures low (NGK24) posted on April 26. Nat-gas prices collapsed over the winter and early spring after unusually mild winter temperatures curbed heating demand for nat-gas and pushed inventories well above average.
Nat-gas prices were under pressure after the Freeport LNG nat-gas export terminal in Texas on March 1 shut down one of its three production units due to damage from extreme cold in Texas. The unit recently reopened on a partial basis. However, Freeport said that once the production unit is fully reopened, the other two units will be taken down for maintenance, and all three units will not return online until late May. The lack of full capacity of the Freeport export terminal limits US nat-gas exports and boosts US nat-gas inventories.
A decline in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US electricity output in the week ended May 18 fell -0.02% y/y to 74,022 GWh (gigawatt hours), although cumulative US electricity output in the 52-week period ending May 18 rose +0.23% y/y to 4,102,933 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended May 17 rose by +78 bcf, below expectations of +85 bcf and below the 5-year average build for this time of year of +92 bcf. As of May 17, nat-gas inventories were up +16.1% y/y and were +28.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 68% full as of May 21, above the 5-year seasonal average of 54% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending May 17 was unchanged at 103 rigs, just above the 2-1/2 year low of 102 rigs posted in the week ending May 3. Active rigs have fallen since climbing to a 4-1/2 year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.