June Nymex natural gas (NGM24) on Wednesday closed down -0.097 (-3.75%).
June nat-gas prices Wednesday fell to a 1-1/2 week low and closed moderately lower on forecasts for cooler US weather that would reduce nat-gas demand from electricity providers for air-conditioning. Maxar Technologies said Wednesday that forecasts for much of the northeastern into the central parts of the US shifted cooler for June 8-12.
Tuesday's projection from the National Weather Service (NWS) is supportive for nat-gas prices as the 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."
Nat-gas prices have rebounded higher to a 4-1/2 month high last Thursday from the 3-3/4 year nearest-futures low (NGK24) posted on April 26. Nat-gas prices collapsed over the winter and early spring after unusually mild winter temperatures curbed heating demand for nat-gas and pushed inventories well above average.
Lower-48 state dry gas production Wednesday was 99.5 bcf/day (-1.9% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 65.3 bcf/day (+7.8% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 13.3 bcf/day (+2.4% w/w), according to BNEF.
A decline in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported last Wednesday that total US electricity output in the week ended May 18 fell -0.02% y/y to 74,022 GWh (gigawatt hours), although cumulative US electricity output in the 52-week period ending May 18 rose +0.23% y/y to 4,102,933 GWh.
The consensus is for Thursday's weekly EIA nat-gas inventories to climb +74 bcf, below the five-year average for this time of year of +104 bcf.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended May 17 rose by +78 bcf, below expectations of +85 bcf and below the 5-year average build for this time of year of +92 bcf. As of May 17, nat-gas inventories were up +16.1% y/y and were +28.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 69% full as of May 27, above the 5-year seasonal average of 56% 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 May 24 fell by -4 rigs to a 2-1/2 year low of 99 rigs. Active rigs have fallen since climbing to a 4-1/2 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.
