October Nymex natural gas (NGV24) on Monday closed up by +0.179 (+7.35%).
Oct nat-gas prices Monday rallied sharply to a 3-month high on concern a tropical storm developing in the Caribbean will strengthen into a hurricane as it moves north and disrupt nat-gas production in the Gulf of Mexico. The tropical storm will be named Helene if it becomes more organized. The US National Hurricane Center said Monday that the storm is expected to strengthen as it moves north through the Gulf of Mexico and could make landfall somewhere between New Orleans and Florida's west coast. According to the EIA, 5% of total US dry nat-gas production comes from the Gulf of Mexico, and 51% of total US nat-gas processing plant capacity is located along the US Gulf coast.
Lower-48 state dry gas production Monday was 100.5 bcf/day (-0.9% y/y), according to BNEF. Lower-48 state gas demand Monday was 71.7 bcf/day (+10.7% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 12.2 bcf/day (-5.3% 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 September 14 rose +0.51% y/y to 80,674 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 14 rose +1.42% y/y to 4,141,969 GWh.
Last Thursday's weekly EIA report was mildly bearish for nat-gas prices since nat-gas inventories for the week ended September 13 rose +58 bcf, above expectations of +56 but well below the 5-year average build for this time of year of +80 bcf. As of September 13, nat-gas inventories were up +5.4% y/y and were +8.6% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 93% full as of September 15, above the 5-year seasonal average of 88% 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 September 20 fell by -1 rigs to 96 rigs, just 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.
