Sep Nymex natural gas (NGU24) on Monday closed down -0.015 (-0.73%).
Sep nat-gas prices Monday extended the sharp week-long sell-off and posted a new contract low. Meanwhile, Aug nat-gas prices dropped to a 3-month low on the nearest futures chart and are hovering just moderately above the 4-year nearest-futures low posted earlier this year in March. Nat-gas prices recovered from their worst levels Monday as short-covering emerged when European nat-gas prices jumped to a 3-week high.
Nat-gas prices were undercut Monday by elevated inventory concerns after last Thursday's weekly EIA report showed that US nat-gas inventories are plentiful at +16.4% above their 5-year seasonal average. Also, forecasts for cooler US temperatures that will reduce demand for air-conditioning and electricity are negative for prices. Forecaster Maxar Technologies said Monday that forecasts had shifted cooler from the West to the Midwest for Aug 8-12.
Lower-48 state dry gas production Monday was 103 bcf/day (+1.7% y/y), according to BNEF. Lower-48 state gas demand Monday was 79.3 bcf/day (+4.8% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 13.4 bcf/day (+12.4% 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 on July 24 that total US electricity output in the week ended July 20 rose +1.93% y/y to 97,296 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 20 rose +2.27% y/y to 4,150,953 GWh.
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 27, 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.
