November Nymex natural gas (NGX24) on Monday closed down by -0.108 (-3.78%).
Nov nat-gas prices Monday tumbled to a 2-week low and closed sharply lower on the outlook for demand destruction from Hurricane Milton. The hurricane has strengthened into a powerful Category 5 storm and will likely knock out electricity in Florida and decrease demand from power plants to produce electricity.
A mixed US weather forecast is also bearish for nat-gas prices. Forecaster Atmospheric G2 said today that forecasts shifted significantly cooler across much of the northern and eastern US, while the southern US shifted warmer for October 12-16.
Lower-48 state dry gas production Monday was 100.8 bcf/day (-1.9% y/y), according to BNEF. Lower-48 state gas demand Monday was 70.5 bcf/day (+5.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 12.2 bcf/day (+11.2% 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 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.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended September 27 rose +55 bcf, below expectations of +62 and well below the 5-year average build for this time of year of +98 bcf. As of September 27, nat-gas inventories were up +3.0% y/y and were +5.7% 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 October 4 rose by +3 rigs to 102 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.
