November Nymex natural gas (NGX23) on Monday closed +0.038 (+1.14%).
Nat-gas prices on Monday extended last week's rally and posted an 8-1/2 month nearest-futures high. Forecasts for colder U.S. temperatures that would boost heating demand for nat-gas are underpinning prices. The Commodity Weather Group said below-normal temperatures are expected for the central and eastern U.S. from Oct 14-18.
Nat-gas prices also moved higher Monday on concerns about global supplies after Chevron shut down a nat-gas production field in Israel because of safety concerns after Hamas militants attacked Israel over the weekend.
Lower-48 state dry gas production Monday was 101.8 bcf/day (+0.5% y/y), according to BNEF. Lower-48 state gas demand Monday was 70.8 bcf/day, +6.0% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals on Monday were 13.5 bcf/day or +7.0% w/w.
High inventories caused by carryover from the mild 2022/23 winter and weak heating demand have undercut nat-gas prices. Gas storage across Europe was 96% full as of October 2, above the 5-year seasonal average of 88% full for this time of year. U.S. nat-gas inventories as of September 29 were +5.3% above their 5-year seasonal average.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. The Edison Electric Institute reported last Wednesday that total U.S. electricity output in the week ended September 30 rose +9.1% y/y to 77,239 GWh (gigawatt hours), and cumulative U.S. electricity output in the 52-week period ending September 30 fell -0.8% y/y to 4,087,619 GWh.
Last Thursday's weekly EIA report of +86 bcf for the week ended September 29 was bullish for nat-gas prices since it was below expectations of +94 bcf and the 5-year average for this time of year at +103 bcf. As of September 29, nat-gas inventories were up +10.9% y/y and were +5.3% above their 5-year seasonal average, signaling ample nat-gas supplies.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended October 6 rose by +2 to 118 rigs, modestly above the 19-month low of 113 rigs from September 8. Active rigs rose to a 4-year high of 166 rigs in September 2022. Active rigs have roughly 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.
