Sep Nymex natural gas (NGU24) on Friday closed down -0.021 (-1.01%), posting the fourth consecutive decline.
Sep nat-gas prices on Friday extended the sharp 4-session sell-off and posted a new contract low. Meanwhile, Aug nat-gas prices fell to a new 2-3/4 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 were undercut Friday by continued inventory concerns after Thursday's bearish weekly EIA report showed that inventories rose by +22 bcf, more than expectations of +11 bcf. Nat-gas inventories are plentiful at +16.4% above their 5-year seasonal average.
Weather remains bullish for nat-gas prices as hot temperatures boost demand for air-conditioning and electricity. NatGasWeather sees hot temperatures for most of the US during Aug 2-9, especially from Texas to California.
Lower-48 state dry gas production Friday was 103.9 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand Friday was 76.0 bcf/day (-5.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 12.9 bcf/day (+13.9% 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.
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 80% full as of July 8, above the 5-year seasonal average of 70% full for this time of year.
Baker Hughes reported 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.
