November Nymex natural gas (NGX23) on Thursday closed -0.099 (-3.24%).
Nat-gas prices on Thursday retreated for the seventh consecutive session and posted a 2-week low. Nat-gas prices tumbled Thursday after weekly EIA nat-gas inventories rose +97 bcf, much higher than expectations of +83 bcf. Nat-gas prices were also undercut by warmer weather that is expected in much of the eastern U.S. while weather in the western U.S. is cooler, cutting nat-gas demand for heating and air conditioning. Maxar Technologies said the remnants of the West Pacific Typhoon Bolaven will keep temperatures cooler along the West Coast over the next two weeks and warmer in the eastern two-thirds of the U.S.
Nat-gas prices have carryover support from last Friday's rally in European nat-gas price to an 8-month high on concerns about global supplies after Chevron shut down a nat-gas production field in Israel because of safety concerns tied to the Israel-Hamas conflict. As a result of the drop in fuel flows, Egypt said it is re-examining plans to export LNG to Europe.
Lower-48 state dry gas production Thursday was 102.6 bcf/day (+3.0% y/y), according to BNEF. Lower-48 state gas demand Thursday was 67.5 bcf/day, -16.7% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals on Thursday were 14.1 bcf/day or -0.5% 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 98% full as of October 16, above the 5-year seasonal average of 89% full for this time of year. U.S. nat-gas inventories as of October 13 were +5.1% above their 5-year seasonal average.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended October 14 fell -1.8% y/y to 68,978 GWh (gigawatt hours), and cumulative U.S. electricity output in the 52-week period ending October 14 fell -0.5% y/y to 4,092,610 GWh.
Thursday's weekly EIA report of +97 bcf for the week ended October 13 was bearish for nat-gas prices since it was above expectations of +83 bcf and above the 5-year average for this time of year at +85 bcf. As of October 13, nat-gas inventories were up +8.5% y/y and were +5.1% 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 13 fell by -1 to 117 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.
