June Nymex natural gas (NGM24) on Wednesday closed down -0.097 (-3.75%).
June nat-gas prices Wednesday fell to a 1-1/2 week low and closed moderately lower on forecasts for cooler US weather that would reduce nat-gas demand from electricity providers for air-conditioning. Maxar Technologies said Wednesday that forecasts for much of the northeastern into the central parts of the US shifted cooler for June 8-12.
Tuesday's projection from the National Weather Service (NWS) is supportive for nat-gas prices as the NWS said that "the vast majority of the lower 48 US states could see above-average temperatures for the next three months, and for a good portion of states, a hotter-than-normal summer is the most likely scenario."
Nat-gas prices have rebounded higher to a 4-1/2 month high last Thursday 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.
Lower-48 state dry gas production Wednesday was 99.5 bcf/day (-1.9% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 65.3 bcf/day (+7.8% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 13.3 bcf/day (+2.4% w/w), according to BNEF.
A decline in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported last 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.
The consensus is for Thursday's weekly EIA nat-gas inventories to climb +74 bcf, below the five-year average for this time of year of +104 bcf.
Last 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 69% full as of May 27, above the 5-year seasonal average of 56% 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 May 24 fell by -4 rigs to a 2-1/2 year low of 99 rigs. 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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