Sep Nymex natural gas (NGU24) on Thursday closed down -0.086 (-3.99%).
Sep nat-gas prices on Thursday extended the sharp 3-session sell-off and closed just mildly above the contract low posted on July 17. Meanwhile, Aug nat-gas prices are hovering just moderately above the 4-year low posted earlier this year in March on the nearest-futures chart.
Nat-gas prices were undercut Thursday by the bearish weekly EIA report. US nat-gas inventories in the week ended July 19 rose by +22 bcf, above the consensus of +11 bcf, although at least below the 5-year average for the week of +31 bcf. Nat-gas inventories remain plentiful at +16.4% above their 5-year seasonal average.
Weather is mixed for nat-gas prices. The general outlook is for continued hot US weather, although forecasts shifted slightly cooler for the Northeast, Midwest, and Pacific Northwest for July 30 to Aug 3, according to Atmospheric G2.
Lower-48 state dry gas production Thursday was 102.2 bcf/day (+1.9% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 76.1 bcf/day (-2.8% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 12.7 bcf/day (+17.4% 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 last Friday that the number of active US nat-gas drilling rigs in the week ending July 19 rose +3 rigs to 103 rigs, modestly above the 2-3/4 year low of 97 rigs from 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.
