July Nymex natural gas (NGN24) on Thursday closed down by -0.086 (-2.82%).
July nat-gas prices settled moderately lower on Thursday after weekly EIA nat-gas supplies rose more than expected. The EIA reported Thursday that nat-gas inventories for the week ended June 7 rose +74 bcf, above the consensus of +72 bcf, keeping nat-gas inventories +23.9% above their 5-year seasonal average and signaling robust supplies.
Prices recovered from their worst levels Thursday after forecaster Atmospheric G2 said near-record heat is expected in the eastern half of the US from June 18-22, boosting nat-gas demand from electricity providers for air-conditioning.
The outlook for hot summer temperatures in the US is a bullish factor for nat-gas prices. Last Tuesday, the National Weather Service (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."
Lower-48 state dry gas production Thursday was 99.2 bcf/day (+0.1% y/y), according to BNEF. Lower-48 state gas demand Thursday was 69.7 bcf/day (+2.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 12.9 bcf/day (-1.8% w/w), according to BNEF.
An increase in US electricity output is positive for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US electricity output in the week ended June 8 rose +10.89% y/y to 84,405 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 8 rose +1.02% y/y to 4,121,928 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended June 7 rose by +74 bcf, above expectations of +72 bcf but below the 5-year average build for this time of year of +89 bcf. As of June 7, nat-gas inventories were up +12.9% y/y and were +23.9% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 72% full as of June 10, above the 5-year seasonal average of 61% 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 June 7 fell by -2 rigs to a 2-3/4 year low of 98 rigs. Active rigs have fallen since climbing to a 4-3/4 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.