November Nymex natural gas (NGX24) on Wednesday closed down by -0.073 (-2.67%).
Nov nat-gas prices today extended this week's losses to a 2-1/2 week low and closed moderately lower. Forecasts for above-normal fall temperatures that curb nat-gas demand for heating are weighing on prices. NatGasWeather said Wednesday that "the 10-15 day forecast favors warmer-than-normal temperatures over most of the US with highs of 60s-80s" for October 18-22.
Nat-gas prices are also under pressure on the outlook for demand destruction from Hurricane Milton. The hurricane has strengthened into a powerful Category 4 storm and will likely knock out electricity in much of Florida and reduce gas demand from power plants to produce electricity.
Lower-48 state dry gas production Wednesday was 100.7 bcf/day (-2.8% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 70.6 bcf/day (+3.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 12.4 bcf/day (+5.3% 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 October 5 rose +3.58% y/y to 78,680 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 5 28 rose +1.48% y/y to 4,154,306 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +71 bcf
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 95% full as of October 6, above the 5-year seasonal average of 91% 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.
