July Nymex natural gas (NGN24) on Monday closed down by -0.012 (-0.41%).
July nat-gas prices Monday retreated from a 2-week high and settled slightly lower. Long liquidation in nat-gas emerged Monday after updated weather forecasts called for milder US temperatures than were initially forecast. The Commodity Weather Group said that forecasts shifted slightly cooler for much of the central, southern, and western US from June 11-15, which will curb nat-gas demand from electricity providers to power air-conditioning usage.
The outlook for warm 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 100.1 bcf/day (-1.2% y/y), according to BNEF. Lower-48 state gas demand Monday was 68.4 bcf/day (+7.7% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 12.8 bcf/day (-2.0% 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 1 rose +1.99% y/y to 78,143 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 1 rose +0.67% y/y to 4,113,640 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 31 rose by +98 bcf, above expectations of +88 bcf but below the 5-year average build for this time of year of +103 bcf. As of May 31, nat-gas inventories were up +13.5% y/y and were +25.1% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 70% full as of June 2, above the 5-year seasonal average of 58% 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 7 fell by -2 rigs to 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).
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.
