November Nymex natural gas (NGX24) on Wednesday closed down by -0.010 (-0.35%).
Nov nat-gas prices Wednesday fell back from a 3-1/2 month high and closed moderately lower. Nat-gas gave up its gains on the outlook for larger US supplies. The Matterhorn Express Pipeline began operations this week in Texas with a design capacity of 2.5 bcf per day. The pipeline will move nat-gas over 580 miles from the Waha hub in West Texas to the Houston area, increasing domestic supplies and boosting gas supplies to gas export plants on the Gulf Coast.
Nat-gas prices Wednesday initially rallied to a 3-1/2 month high on forecasts for warmer US weather that will boost demand from electricity providers to run air conditioning. Forecaster Maxar Technologies projects above-normal temperatures for the western half of the US from October 7-11, with the Southwestern US posting record highs.
Lower-48 state dry gas production Wednesday was 100.7 bcf/day (-0.2% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 70.9 bcf/day (+3.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 11.8 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 Wednesday that total US electricity output in the week ended September 28 rose +3.29% y/y to 79,779 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 28 rose +1.56% y/y to 4,151,587 GWh.
The consensus is that Thursday's weekly EIA bat-gas inventories will climb +62 bcf, well below the five-year average for this time of year of +98 bcf.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended September 20 rose +47 bcf, below expectations of +52 and well below the 5-year average build for this time of year of +88 bcf. As of September 20, nat-gas inventories were up +4.0% y/y and were +7.1% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 94% full as of September 30, above the 5-year seasonal average of 90% 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 27 rose by +3 rigs to 99 rigs, modestly above the 3-1/3 year low from September 6 of 94 rigs. Active rigs have fallen 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.
