Sep Nymex natural gas (NGU24) on Wednesday closed down -0.090 (-4.23%).
Sep nat-gas prices on Wednesday closed sharply lower but remained above Tuesday's 3-month nearest futures low. Forecasts for cooler temperatures in the Midwest that will curb nat-gas demand from electricity providers to power air conditioning weighed on prices. NatGasWeather.com said Wednesday that a high-pressure system will keep temperatures hot in Texas and California but will keep temperatures seasonal in the Midwest for August 7-14.
Lower-48 state dry gas production Wednesday was 103.6 bcf/day (+1.6% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 83.1 bcf/day (+8.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 12.8 bcf/day (+7.8% w/w), according to BNEF.
A decline in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US electricity output in the week ended July 27 fell -6.23% y/y to 91,383 GWh (gigawatt hours), although US electricity output in the 52-week period ending July 27 rose +2.03% y/y to 4,144,884 GWh.
The consensus is for Thursday's weekly EIA nat-gas inventories to climb by +31 bcf, just below the five-year average for this time of year of +33 bcf.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended July 19 rose by +22 bcf, above expectations of +11 bcf but below the 5-year average build for this time of year of +31 bcf. As of July 19, nat-gas inventories were up +8.2% y/y and were +16.4% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 84% full as of July 28, above the 5-year seasonal average of 75% 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 26 fell -2 rigs to 101 rigs, modestly above the 2-3/4 year low of 97 rigs posted June 28. Active rigs have fallen back since posting a 4-3/4 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.
