August Nymex natural gas (NGQ24) on Wednesday closed down by -0.153 (-6.99%).
Aug nat-gas prices Wednesday plummeted to a 2-1/2 month low and closed sharply lower. A glut of US nat-ga supplies continues to undercut prices, with nat-gas inventories +18.7% above their 5-year seasonal average as of July 5. Also, an outage at the Freeport liquified natural gas terminal has reduced US gas exports and boosted already bloated inventories. The Freeport LNG terminal slowly began to restart after Hurricane Beryl damaged part of the plant. The Freeport LNG plant is one of the largest in the US and can liquefy as much as 2% of US daily gas production.
Lower-48 state dry gas production Wednesday was 100.8 bcf/day (+0.3% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 79.7 bcf/day (+3.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 10.6 bcf/day (-6.2% 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 Wednesday that total US electricity output in the week ended July 13 rose +2.5% y/y to 97,089 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 13 rose +2.13% y/y to 4,149,112 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +27 bcf.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended July 5 rose by +65 bcf, above expectations of +58 bcf and above the 5-year average build for this time of year of +57 bcf. As of July 5, nat-gas inventories were up +9.2% y/y and were +18.7% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 80% full as of July 8, above the 5-year seasonal average of 70% 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 July 12 fell -1 rig to 100 rigs, just above the 2-3/4 year low of 97 rigs from June 28. 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).
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