August Nymex natural gas (NGQ24) on Wednesday closed down by -0.015 (-0.64%).
Aug nat-gas prices posted moderate losses on Wednesday. Prices came under pressure Wednesday after US weather forecasts shifted cooler, which will curb nat-gas demand from electricity providers to power air conditioning. The Commodity Weather Group said Wednesday that the northern and central parts of the US will see significantly cooler temperatures July 15-19.
Nat-gas prices have underlying support from the outlook for hot US temperatures this summer. The National Weather Service (NWS) said on June 11 that "the vast majority of the lower 48 US states could see above-average temperatures for the next three months, and for a good portion of states, a hotter-than-normal summer is the most likely scenario."
Lower-48 state dry gas production Wednesday was 100.2 bcf/day (-1.4% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 79.5 bcf/day (+7.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 11.2 bcf/day (-8.2% 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 6 rose +2.9% y/y to 92,792 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 6 rose +2.1% y/y to 4,146,741 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +55 bcf, above the five-year average for this time of year of +53 bcf.
Last Wednesday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended June 28 rose by +32 bcf, close to expectations of +31 bcf but below the 5-year average build for this time of year of +69 bcf. However, as of June 28, nat-gas inventories were up +8.8% y/y and were +18.8% 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 5 rose +4 rigs to 101 rigs, recovering from the prior week's 2-3/4 year low of 97 rigs. 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).
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.
