Aug Nymex natural gas (NGQ23) on Friday closed -0.027 (-1.03%).
Nat-gas prices Friday dropped to a 2-week low and closed moderately lower. A larger-than-expected build in weekly EIA gas stockpiles weighed on prices after the EIA reported nat-gas inventories rose +72 bcf last week, above expectations of +65 bcf. Also, normal to below-normal temperatures are forecast for the north-central and eastern U.S. from July 12-16, reducing nat-gas demand from electricity providers to power air conditioning.
Lower-48 state dry gas production on Friday was 101.9 bcf/day (+5.1% y/y), according to BNEF. Lower-48 state gas demand Friday was 73.6 bcf/day, -0.4% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Friday were 12.6 bcf/day or +3.7% 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 30 were +14.6% above their 5-year seasonal average.
Friday's weekly EIA report of +72 bcf for the week ended June 30 was bearish for nat-gas prices since it was above the market estimate of +65 bcf and the 5-year average increase for the week of +64 bcf. Nat-gas inventories as of June 30 were up +24.5% y/y and +14.6% above their 5-year seasonal average.
Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ended July 7 rose by 11 rigs to 135 rigs, rebounding from the prior week's 1-1/4 year low of 124 rigs. Active rigs rose to a 3-3/4 year high of 166 rigs 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.
