Sep Nymex natural gas (NGU24) on Wednesday closed up by +0.015 (+0.71%).
Sep nat-gas prices Thursday climbed to a 2-week high after weekly EIA nat-gas supplies rose less than expected. The EIA reported that nat-gas inventories rose +21 bcf, below expectations of +25 bcf and below the five-year average for this time of year of +38 bcf. Nat-gas prices also had carryover support Thursday from a rally in European LNG prices to an 8-month high.
However, nat-gas prices gave up most of their gains Thursday on forecasts for cooler US weather, which will reduce nat-gas demand from electricity providers to run air conditioning. The Commodity Weather Group said Thursday that forecasts have cooled across much of the East Coast, the Midwest, and parts of the South for August 13-17.
On Monday, nat-gas prices tumbled to a 3-1/2 month nearest futures low on forecasts for cooler US weather amid elevated nat-gas stockpiles. Current US nat-gas supplies are abundant, with nat-gas inventories +15.7% above their 5-year seasonal average as of July 26.
Lower-48 state dry gas production Thursday was 100.9 bcf/day (+1.0% y/y), according to BNEF. Lower-48 state gas demand Thursday was 76.7 bcf/day (+0.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 12.7 bcf/day (+4.0% 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 Wednesday that total US electricity output in the week ended August 3 rose +3.28% y/y to 98,465 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 3 rose +2.13% y/y to 4,148,013 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 2 rose by +21 bcf, below expectations of +25 bcf and below the 5-year average build for this time of year of +38 bcf. As of August 2, nat-gas inventories were up +7.9% y/y and were +14.9% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 86% full as of August 4, above the 5-year seasonal average of 77% 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 August 2 fell -3 rigs to 98 rigs, just above the 3-year low of 97 rigs posted June 28. 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.
