July Nymex natural gas (NGN24) on Monday closed down by -0.093 (-3.23%).
July nat-gas prices Monday dropped to a 1-week low on the outlook for US gas supplies to remain elevated. As of June 7, nat-gas inventories were +23.9% above their 5-year seasonal average, signaling ample nat-gas supplies.
Nat-gas prices were also under pressure on expectations for cooler US temperatures to emerge toward the end of this week, which will curb air-conditioning usage. The National Weather Service said that current hot US temperatures will begin to moderate from June 21-25.
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 Monday was 100.6 bcf/day (+1.1% y/y), according to BNEF. Lower-48 state gas demand Monday was 74.2 bcf/day (+13.6% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 13.1 bcf/day (+1.2% 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 last 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.
Last 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 14 was unchanged at 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.