August Nymex natural gas (NGQ24) on Thursday closed down by -0.061 (-2.62%).
Aug nat-gas prices Thursday tumbled to an 8-week low on abundant US nat-gas supplies. Thursday's weekly report from the EIA showed nat-gas inventories rose +65 bcf, above expectations of +58 bcf, leaving gas supplies +18.7% above the five-year average. The weather picture is mixed for nat-gas prices. Forecaster Atmospheric G2 said Thursday that forecasts shifted warmer over parts of the western US but cooler in the southeast for July 16-20.
Nat-gas prices have underlying support from the outlook for hot US temperatures this summer, which could boost nat-gas demand from electricity providers to power air conditioning. 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 Thursday was 100.3 bcf/day (+0.1% y/y), according to BNEF. Lower-48 state gas demand Thursday was 78.1 bcf/day (+4.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 11.1 bcf/day (-13.9% 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.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended July 5 rose by +65 bcf, above expectations of +58 bcf and above the 5-year average build for this time of year of +57 bcf. As of July 5, nat-gas inventories were up +9.2% y/y and were +18.7% 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.
