November Nymex natural gas (NGX23) on Wednesday closed +0.039 (+1.31%).
Nat-gas prices on Wednesday posted moderate gains on expectations for colder-than-normal temperatures to envelope most of the U.S. next week, boosting heating demand for nat-gas. Forecaster Atmospheric G2 said several rounds of polar cold will expand across the eastern two-thirds of the U.S. from Oct 30 to Nov 3.
Nat-gas prices have support from concern about global supplies after Chevron shut down a nat-gas production field in Israel because of safety concerns tied to the Israel-Hamas conflict. As a result of the drop in fuel flows, Egypt said it is re-examining plans to export LNG to Europe.
Lower-48 state dry gas production Wednesday was 100.9 bcf/day (+1.4% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 66.1 bcf/day, -2.7% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals on Wednesday were 13.7 bcf/day or -3.2% w/w.
High inventories caused by carryover from the mild 2022/23 winter and weak heating demand have undercut nat-gas prices. Gas storage across Europe was 99% full as of October 23, above the 5-year seasonal average of 90% full for this time of year. U.S. nat-gas inventories as of October 13 were +5.1% above their 5-year seasonal average.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended October 21 fell -1.0% y/y to 69,105 GWh (gigawatt hours), and cumulative U.S. electricity output in the 52-week period ending October 21 fell -0.6% y/y to 4,091,935 GWh.
The consensus is for Thursday's weekly EIA nat-gas inventories to climb by +81 bcf.
Last Thursday's weekly EIA report of +97 bcf for the week ended October 13 was bearish for nat-gas prices since it was above expectations of +83 bcf and above the 5-year average for this time of year at +85 bcf. As of October 13, nat-gas inventories were up +8.5% y/y and were +5.1% above their 5-year seasonal average, signaling ample nat-gas supplies.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended October 20 rose by +1 to 118 rigs, modestly above the 19-month low of 113 rigs from September 8. Active rigs rose to a 4-year high of 166 rigs in September 2022. Active rigs have roughly doubled from the 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.
