Sep Nymex natural gas (NGU24) on Monday closed down -0.025 (-1.27%).
Sep nat-gas prices on Monday dropped to a 3-1/2 month nearest futures low and closed moderately lower. Forecasts for cooler US weather amid elevated nat-gas stockpiles are weighing on prices. Forecaster Maxar Technologies said Monday that forecasts trended cooler along the northern tier of the US, especially from the Midwest to the East, for August 10-14. The cooler temperatures are bearish for prices as they curb nat-gas demand from electricity providers to power air conditioning. Also, current US nat-gas supplies are abundant, and as of July 26, nat-gas inventories were +15.7% above their 5-year seasonal average.
Lower-48 state dry gas production Monday was 103 bcf/day (+0.7% y/y), according to BNEF. Lower-48 state gas demand Monday was 82.3 bcf/day (+12.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 13.1 bcf/day (-1.2% w/w), according to BNEF.
A decline in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported last Wednesday that total US electricity output in the week ended July 27 fell -6.23% y/y to 91,383 GWh (gigawatt hours), although US electricity output in the 52-week period ending July 27 rose +2.03% y/y to 4,144,884 GWh.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 26 rose by +18 bcf, below expectations of +31 bcf and below the 5-year average build for this time of year of +33 bcf. As of July 26, nat-gas inventories were up +8.3% y/y and were +15.7% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 84% full as of July 28, above the 5-year seasonal average of 75% 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 August 2 fell -3 rigs to 98 rigs, just above the 3-year low of 97 rigs posted June 28. Active rigs have fallen back since posting a 5-year high of 166 rigs in Sep 2022, up 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.
