October Nymex natural gas (NGV24) on Friday closed up by +0.021 (+0.93%).
Oct nat-gas prices Friday extended Thursday's rally and posted a new 2-week high. Signs that elevated US nat-gas storage levels are being whittled down gave prices a boost after Thursday's weekly nat-gas supplies rose +13 bcf, weaker than expectations of +27 bcf and well below the five-year average for this time of year of +51 bcf.
Nat-gas prices fell back from their best levels Friday on forecasts for cooler US temperatures that will curb nat-gas demand from electricity providers to power air conditioning. On Friday, the Commodity Weather Group said forecasts have shifted cooler for the eastern part of the US for September 16-20.
Nat-gas prices also have carryover support from Saturday when the US Department of Energy awarded a five-year LNG export license to New Fortress Energy to sell gas to countries that do not have a free trade agreement with the US. Since January, this is the first time that the Energy Department has granted an LNG export license and is supportive of prices since an increase in LNG exports could reduce US nat-gas supplies and shrink elevated inventories.
Lower-48 state dry gas production Friday was 100.9 bcf/day (-0.1% y/y), according to BNEF. Lower-48 state gas demand Friday was 70.8 bcf/day (-8.7% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 13.5 bcf/day (+4.8% 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 Thursday that total US electricity output in the week ended August 31 rose +6.26% y/y to 92,863 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 31 rose +1.81% y/y to 4,148,821 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 30 rose +13 bcf, below expectations of +27 and well below the 5-year average build for this time of year of +51 bcf. As of August 30, nat-gas inventories were up +6.3% y/y and were +10.7% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 91% full as of August 21, above the 5-year seasonal average of 83% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending September 6 fell by -1 rig to a 3-1/3 year low of 94 rigs. Active rigs have fallen back since posting a 5-year high of 166 rigs in Sep 2022, up 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.
