October Nymex natural gas (NGV24) on Wednesday closed up by +0.038 (+1.70%).
Oct nat-gas prices Wednesday rallied to a 2-1/2 week high and settled moderately higher. Nat-gas prices rose on forecasts for warmer US temperatures that will boost nat-gas demand from electricity providers to run air conditioning. Maxar Technologies said Wednesday that the 11-15 day forecast is trending warmer in the eastern third of the US.
Nat-gas also has support as Hurricane Francine has made landfall in Louisiana and could disrupt US nat-gas production and deliveries along the Gulf Coast, the source of about 5% of all US dry gas output, according to the EIA.
Lower-48 state dry gas production Wednesday was 99 bcf/day (-3.0% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 71.8 bcf/day (-1.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 11.7 bcf/day (-11.5% w/w), according to BNEF.
A decrease in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US electricity output in the week ended September 7 fell -8.05% y/y to 82,941 GWh (gigawatt hours), although US electricity output in the 52-week period ending September 7 rose +1.46% y/y to 4,141,562 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +48 bcf.
Last 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 93% full as of September 9, above the 5-year seasonal average of 87% 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 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.
