Aug Nymex natural gas (NGQ23) on Thursday closed -0.048 (-1.81%).
Nat-gas prices Thursday moved moderately lower for a third session on the outlook for cooler U.S. temperatures, which will crimp nat-gas demand from electricity providers to power air conditioning. Forecaster Maxar Technologies said below-normal temperatures are expected in the upper Midwest and Great Lakes region from July 6-15.
Lower-48 state dry gas production on Thursday was 100.7 bcf/day (+3.7% y/y), according to BNEF. Lower-48 state gas demand Thursday was 71.0 bcf/day, -3.7% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Thursday were 12.9 bcf/day or +3.1% w/w.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported Thursday that total U.S. electricity output in the week ended July 1 fell -0.4% y/y to 89,839 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending July 1 fell -1.0 y/y to 4,062,263 GWh.
Nat-gas prices continue to be undercut by high inventories caused by weak heating demand during the abnormally mild winter. This past winter's warm temperatures caused nat-gas inventories to rise in Europe and the United States. Gas storage across Europe was 78% full as of July 1, well above the 5-year seasonal average of 62% full for this time of year. U.S. nat-gas inventories as of June 23 were +14.6% above their 5-year seasonal average.
The consensus is for Friday's weekly EIA nat-gas inventories to climb +65 bcf.
Last Thursday's weekly EIA report of +76 bcf for the week ended June 23 was bullish for nat-gas prices since it was below the market estimate of +82 bcf and the 5-year average increase for the week of +80 bcf. Nat-gas inventories as of June 23 were up +14.6% y/y and +14.6% above their 5-year seasonal average.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended June 30 fell by 6 rigs to a 1-1/4 year low of 124 rigs, down from the 3-3/4 year high of 166 rigs posted in September 2022. Active rigs have more than 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.
