August Nymex natural gas (NGQ24) on Friday closed down by -0.099 (-4.09%).
Aug nat-gas prices Friday declined for the eighth consecutive session and posted a 7-week low. Nat-gas prices remain under pressure due to abundant supplies as US nat-gas inventories as of June 28 were +18.8% above their 5-year seasonal average. Also, weather forecasts have been trending cooler in the US, which will curb nat-gas demand from electricity providers to run air-conditioning. The Commodity Weather Group said Wednesday that forecasts moved cooler for the central part of the US for July 8-12.
The outlook for hot summer temperatures in the US is a bullish factor for nat-gas prices. The National Weather Service (NWS) said on June 11 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 Friday was 102.2 bcf/day (-0.2% y/y), according to BNEF. Lower-48 state gas demand Friday was 77 bcf/day (+3.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 13 bcf/day (+2.4% 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 29 rose +7.2% y/y to 96,297 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 29 rose +2.01% y/y to 4,144,116 GWh.
Wednesday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended June 28 rose by +32 bcf, close to expectations of +31 bcf but below the 5-year average build for this time of year of +69 bcf. However, as of June 28, nat-gas inventories were up +8.8% y/y and were +18.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 77% full as of June 30, above the 5-year seasonal average of 67% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending July 5 rose +4 rigs to 101 rigs, recovering from the prior week's 2-3/4 year low of 97 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).
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.
