October Nymex natural gas (NGV23) on Thursday closed -0.123 (-4.50%).
Nat-gas prices on Thursday tumbled for a second day on the outlook for warmer-than-normal temperatures to curb heating demand for nat-gas. Forecaster Atmospheric G2 said the middle of the U.S. and much of Canada are expected to be warmer than normal for the rest of this month, resulting in below-average heating demand for nat-gas. Weekly EIA nat gas inventories rose +64 bcf, close to expectations of +65 bcf.
Nat-gas was also under pressure Thursday on reports that said Chevron Corp and unions in Australia are close to a regulator-brokered deal to end strikes of LNG export facilities as soon as Friday. LNG workers at key Chevron sites in Australia recently began partial strikes after talks with management failed to reach an agreement. Inspired Plc predicts Asian LNG buyers "would likely bid up LNG imports" to replace Australian volumes if Australian strikes reduce Australian LNG production. Australia is the world's third-largest liquified natural gas (LNG) exporter, accounting for about 10% of global supplies last year.
Lower-48 state dry gas production Thursday was 100 bcf/day (+1.2% y/y), according to BNEF. Lower-48 state gas demand Thursday was 65.7 bcf/day, -4.6% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Thursday were 11.7 bcf/day or -7.6% w/w.
High inventories caused by carry-over from the mild 2022/23 winter and weak heating demand have undercut nat-gas prices. Gas storage across Europe was 94% full as of September 18, well above the 5-year seasonal average of 85% full for this time of year. U.S. nat-gas inventories as of September 15 were +5.9% above their 5-year seasonal average.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended September 16 rose +2.3% y/y to 80,267 GWh (gigawatt hours). However, cumulative U.S. electricity output in the 52-week period ending September 16 fell -0.9% y/y to 4,083,880 GWh.
Thursday's weekly EIA report of +64 bcf for the week ended September 15 was neutral for nat-gas prices since it was close to expectations of +65 bcf, although below the 5-year average for this time of year at +84 bcf. As of September 15, nat-gas inventories were up +13.7% y/y and were +5.9% 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 September 15 rose by +8 to 121 rigs, rebounding from the prior week's 19-month low of 113 rigs. 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.
