Sep Nymex natural gas (NGU24) on Monday closed up by +0.112 (+5.28%).
Sep nat-gas prices Monday recovered from a 1-week low and closed sharply higher. Short covering emerged in nat-gas futures Monday, and prices soared after weather forecasts called for hotter US temperatures that would boost nat-gas demand from electricity providers to run air conditioning. Forecaster Atmospheric G2 said Monday that forecasts shifted hotter for the eastern two-thirds of the US for August 24-18.
Earlier this month, nat-gas prices tumbled to a 3-3/4 month nearest futures low on forecasts for cooler US weather amid elevated nat-gas stockpiles. Current US nat-gas supplies are abundant, with nat-gas inventories +13% above their 5-year seasonal average as of August 9.
Lower-48 state dry gas production Monday was 101.5 bcf/day (-0.7% y/y), according to BNEF. Lower-48 state gas demand Monday was 77.2 bcf/day (+9.9% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 12.8 bcf/day (+0.5% 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 last Wednesday that total US electricity output in the week ended August 10 rose +2.55% y/y to 95,115 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 10 rose +2.16% y/y to 4,150,379 GWh.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 9 unexpectedly fell -6 bcf, below expectations of +1 bcf and well below the 5-year average build for this time of year of +43 bcf. Thursday's unexpected draw was the first decline in weekly nat-gas storage in 8 years. As of August 9, nat-gas inventories were up +6.5% y/y and were +13.0% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 88% full as of August 11, above the 5-year seasonal average of 79% 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 16 rose +1 rig to 98 rigs, just above 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.
