November Nymex natural gas (NGX24) on Friday closed down by -0.116 (-3.91%).
Nov nat-gas prices Friday retreated from a 3-3/4 month high and sold off sharply on the outlook for tropical storms to move away from the Gulf of Mexico, easing concern about a disruption to US nat-gas production. BOK Financial Securities said Friday that tropical storm activity in the Gulf of Mexico poses less of a threat to US nat-gas infrastructure as storms in the Atlantic are taking an eastward heading and moving away from the Gulf of Mexico.
Nat-gas prices Friday initially posted a 3-3/4 month high on forecasts for warmer US weather that will boost demand from electricity providers to run air conditioning. The Commodity Weather Group said Friday that forecasts have shifted warmer from the western part of the US into the Plains for early to mid-October.
Lower-48 state dry gas production Friday was 100.9 bcf/day (-1.4% y/y), according to BNEF. Lower-48 state gas demand Friday was 69.5 bcf/day (+0.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 12.2 bcf/day (-1.5% 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 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.
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 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.
