October Nymex natural gas (NGV26) on Friday closed down -0.101 (-3.06%).
Nat-gas prices retreated Friday after Columbia Gas Transmission said it found the leak in a West Virginia pipeline that prompted a force majeure and expected to fix it over the weekend, easing concerns about an extended outage.
On Thursday, nat-gas prices surged to a 2.5-month nearest-futures high after TC Energy’s Columbia Gas Transmission pipeline in Appalachia sent out a force majeure to customers due to an “unexpected mechanical issue.” The outage is estimated to reduce firm transportation service by 1.8 bcf/day, about 1.6% of total US supply.
US (lower-48) dry gas production on Friday was 110.6 bcf/day (-0.5% y/y), according to BNEF. Lower-48 state gas demand on Friday was 69.0 bcf/day (-7.9% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 18.5 bcf/day (-1.6% w/w), according to BNEF.
A bearish medium-term factor for nat-gas prices is the market's expectation that a “Super El Niño” will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand for nat-gas.
As a positive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended September 12 rose +16.1% y/y to 94,427 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending September 12 rose +3.3% y/y to 4,405,549 GWh.
As a bearish factor, the US Energy Information Administration (EIA) on August 11 projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average. Last Monday, the EIA raised its 2027 US dry natural gas production estimate to 116.0 bcf/day from 115.3 bcf/day projected in July.
Thursday's weekly EIA report was mixed for nat-gas prices, as it showed a +53 bcf increase in US nat-gas inventories for the week ended September 18, above expectations of +51 but below the 5-year weekly average of +76 bcf. As of September 18, nat-gas inventories were down -4.5% y/y and +2.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 23, gas storage in Europe was 70% full, compared to the 5-year seasonal average of 86% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ended September 25 rose by +1 to a new 3-year high of 135 rigs.
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.
