October Nymex natural gas (NGV24) on Tuesday closed up by +0.062 (+2.86%).
Oct nat-gas prices Tuesday recovered from early losses and moved higher on the outlook for warmer US temperatures, which will boost nat-gas demand from electricity providers to run air conditioning. Maxar Technologies said Tuesday that the 11-15 day forecast is trending warmer in the eastern third of the US.
Nat-gas also has support as Tropical Storm Francine is expected to strengthen into a hurricane in the Gulf of Mexico as soon as Tuesday night, which could disrupt US nat-gas production in the Gulf, the source of about 5% of all US dry gas output, according to the EIA.
Lower-48 state dry gas production Tuesday was 99 bcf/day (-2.5% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 71.4 bcf/day (+3.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 12.9 bcf/day (-1.1% 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 last Thursday that total US electricity output in the week ended August 31 rose +6.26% y/y to 92,863 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 31 rose +1.81% y/y to 4,148,821 GWh.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 30 rose +13 bcf, below expectations of +27 and well below the 5-year average build for this time of year of +51 bcf. As of August 30, nat-gas inventories were up +6.3% y/y and were +10.7% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 91% full as of August 21, above the 5-year seasonal average of 83% 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 September 6 fell by -1 rig to a 3-1/3 year low of 94 rigs. Active rigs have fallen back since posting a 5-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.
