July Nymex natural gas (NGN24) on Thursday closed down by -0.168 (-5.78%).
July nat-gas prices Thursday fell to a 2-week low and finished sharply lower. Nat-gas prices retreated Thursday after updated weather forecasts shifted cooler, which will curb nat-gas demand from electricity providers to power air-conditioning. Maxar Technologies said Thursday that cooler temperatures will develop in the East and Midwest from June 25-29.
The outlook for hot summer temperatures in the US is a bullish factor for nat-gas prices. The National Weather Service (NWS) said 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 100.8 bcf/day (+0.2% y/y), according to BNEF. Lower-48 state gas demand Thursday was 73.5 bcf/day (+5.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 13.1 bcf/day (+1.2% 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 Thursday that total US electricity output in the week ended June 15 rose +6.53% y/y to 84,658 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 15 rose +1.44% y/y to 4,127,116 GWh.
The consensus is that Friday's weekly EIA nat-gas inventories will climb by +69 bcf, below the five-year average of +83 bcf. The report is being delayed by a day due to Wednesday's holiday.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended June 7 rose by +74 bcf, above expectations of +72 bcf but below the 5-year average build for this time of year of +89 bcf. As of June 7, nat-gas inventories were up +12.9% y/y and were +23.9% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 73% full as of June 16, above the 5-year seasonal average of 63% 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 June 14 was unchanged at a 2-3/4 year low of 98 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.
