Aug Nymex natural gas (NGQ23) on Monday closed -0.027 (-1.06%).
Nat-gas prices Monday fell for the fourth consecutive session and posted a 1-month low. Bearish factors included a mixed weather forecast and ample U.S. nat-gas supplies. Forecaster Atmospheric G2 said above-normal temperatures are expected for the southwestern U.S. this week, but the South and Northwest will see normal to below-normal temperatures. The mixed weather forecast should curb nat-gas demand from electricity providers to run air conditioning. In addition, nat-gas prices were under pressure from negative carryover from a slide in European gas prices Monday to a 6-week low.
Lower-48 state dry gas production on Monday was 99.8 bcf/day (+1.9% y/y), according to BNEF. Lower-48 state gas demand Monday was 75.3 bcf/day, +2.0% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Monday were 12.8 bcf/day or +2.8% w/w.
Nat-gas prices continue to be undercut by high inventories caused by weak heating demand during the abnormally mild winter. This past winter's warm temperatures caused nat-gas inventories to rise in Europe and the United States. Gas storage across Europe was 80% full as of July 9, well above the 5-year seasonal average of 65% full for this time of year. U.S. nat-gas inventories as of July 7 were +14.2% above their 5-year seasonal average.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended July 8 fell -1.7% y/y to 90,167 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending July 8 fell -1.1% y/y to 4,060,674 GWh.
Last Thursday's weekly EIA report of +49 bcf for the week ended July 7 was neutral for nat-gas prices since it was near the estimate of +50 bcf. Nat-gas inventories as of July 7 were up +23.7% y/y and +14.2% above their 5-year seasonal average.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended July 14 fell by two rigs to 133 rigs, moderately above the 1-1/4 year low of 124 rigs from the week of June 30. Active rigs rose to a 3-3/4 year high of 166 rigs in September 2022. Active rigs have more than doubled from the 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.
