July Nymex natural gas (NGN23) on Tuesday closed down -0.028 (-1.00%).
Nat-gas prices on Tuesday ran into some long liquidation pressure after Monday's breakout to match a 3-1/4 month high. Also, nat-gas prices fell back a bit on forecasts that excessive heat in Texas and nearby regions will start to moderate this weekend, according to Atmospheric G2. The Commodity Weather Group is looking for cooler temperatures in the Midwest and East.
U.S. nat-gas prices on Tuesday also fell back as the threat of disruptions to Russian gas production faded after Wagner Group's Prigozhin on Tuesday arrived in Belarus for his exile. Natural gas prices rallied early Monday in Europe after the aborted insurrection by the Wagner Group in Russia over the weekend.
Nat-gas prices Monday saw support as natural gas flows rose to Cheniere Energy's Sabine Pass export terminal after recent maintenance shut-downs, which should allow a boost in U.S. LNG exports and a draw-down in nat-gas inventories.
Lower-48 state dry gas production on Tuesday was 98.9 bcf/day (+1.4% y/y), moderately below the record high of 101.7 bcf posted on Apr 23, according to BNEF. Lower-48 state gas demand Tuesday was 68.7 bcf/day, +0.6% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Tuesday were 11.6 bcf/day or +5.1% w/w.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported June 14 that total U.S. electricity output in the week ended June 10 fell -7.1% y/y to 76,117 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending June 10 fell -0.3% y/y to 4,080,360 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 74% full as of June 18, well above the 5-year seasonal average of 58% full for this time of year.
Thursday's weekly EIA report was bearish for nat-gas prices since it showed U.S. nat-gas inventories rose +95 bcf, above the 5-year average for the week of +86 bcf. Nat-gas inventories as of June 16 were +15.3% 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 23 was unchanged at a 15-month low of 130 rigs, well below the 3-3/4 year high of 166 rigs posted in the week ended Sep 9, 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.
