Sep Nymex natural gas (NGU24) on Wednesday closed up by +0.026 (+1.37%).
Sep nat-gas prices Wednesday recovered from a 4-month nearest-futures low and closed moderately higher. Short covering emerged in nat-gas futures Wednesday when forecaster Atmospheric G2 said updated forecasts showed a large portion of the US warming for September 2-6, which will boost nat-gas demand from electricity providers to run air conditioning. The Sep nat-gas futures contract expires on Wednesday.
Over the past week, nat-gas prices have been under pressure and posted a 4-month low Wednesday due to robust supplies and forecasts for moderate temperatures that will reduce nat-gas demand. US nat-gas supplies as of August 16 were +12.6% above their 5-year average.
Lower-48 state dry gas production Wednesday was 102.1 bcf/day (+0.5% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 80.3 bcf/day (+5.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 12.8 bcf/day (-2.7% 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 Wednesday that total US electricity output in the week ended August 24 fell -7.76% y/y to 88,308 GWh (gigawatt hours), although US electricity output in the 52-week period ending August 24 rose +1.65% y/y to 4,143,350 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +34 bcf, below the five-year average for this time of year of +43 bcf.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended August 16 rose +35 bcf, above expectations of +25 bcf but below the 5-year average build for this time of year of +41 bcf. As of August 16, nat-gas inventories were up +7.0% y/y and were +12.6% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 91% full as of August 21, above the 5-year seasonal average of 83% 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 August 23 fell by -1 rig to match the 3-year low of 97 rigs from August 9 and June 28. Active rigs have fallen back 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.
