August Nymex natural gas (NGQ24) on Thursday closed up by +0.090 (+4.42%).
Aug nat-gas prices Thursday settled sharply higher after weekly EIA nat-gas inventories rose less than expected. The EIA reported that nat-gas inventories rose +10 bcf, below expectations of +27 bcf and well below the five-year average for this time of year of +49 bcf.
Nat-gas prices fell back from their best level Thursday after the Commodity Weather Group said forecasts shifted slightly cooler in the upper Midwest for July 23-27, which should curb nat-gas demand from electricity providers to power air conditioning.
On Wednesday, nat-gas prices plummeted to a 2-1/2 month low due to the glut of US nat-gas supplies, with nat-gas inventories +16.9% above their 5-year seasonal average as of July 12. Also, an outage at the Freeport liquified natural gas terminal has reduced US gas exports and boosted already bloated inventories. The Freeport LNG terminal slowly began to restart after Hurricane Beryl damaged part of the plant. The Freeport LNG plant is one of the largest in the US and can liquefy as much as 2% of US daily gas production.
Lower-48 state dry gas production Thursday was 101 bcf/day (+0.2% y/y), according to BNEF. Lower-48 state gas demand Thursday was 76.3 bcf/day (-0.7% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 10.8 bcf/day (-4.8% 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 Wednesday that total US electricity output in the week ended July 13 rose +2.5% y/y to 97,089 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 13 rose +2.13% y/y to 4,149,112 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 12 rose by +10 bcf, below expectations of +27 bcf and below the 5-year average build for this time of year of +49 bcf. As of July 12, nat-gas inventories were up +8.0% y/y and were +16.9% 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 12 fell -1 rig to 100 rigs, just above the 2-3/4 year low of 97 rigs from June 28. Active rigs have fallen since climbing to a 4-3/4 year high of 166 rigs in Sep 2022 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.
