November Nymex natural gas (NGX23) on Wednesday closed +0.054 (+1.90%).
Nat-gas prices Wednesday posted moderate gains and found support on positive carryover from a surge in crude prices to a 13-month high. Gains in nat-gas were limited on forecasts for above-normal U.S. temperatures that will curb heating demand for nat-gas undercut prices. According to forecaster Maxar Technologies, above-normal temperatures are expected from the Midwest to the East Coast from late September to mid-October.
Lower-48 state dry gas production Wednesday was 100.0 bcf/day (+0.5% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 68.3 bcf/day, +7.8% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Wednesday were 12.0 bcf/day or -3.3% 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 95% full as of September 25, well above the 5-year seasonal average of 87% full for this time of year. U.S. nat-gas inventories as of September 15 were +5.9% 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 September 23 fell -3.4% y/y to 76,650 GWh (gigawatt hours), and cumulative U.S. electricity output in the 52-week period ending September 23 fell -1.1% y/y to 4,081,201 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +89 bcf.
Last Thursday's weekly EIA report of +64 bcf for the week ended September 15 was neutral for nat-gas prices since it was close to expectations of +65 bcf, although below the 5-year average for this time of year at +84 bcf. As of September 15, nat-gas inventories were up +13.7% y/y and were +5.9% 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 September 22 fell by -3 to 118 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.
