November Nymex natural gas (NGX23) on Wednesday closed +0.013 (+0.44%).
Nat-gas prices on Wednesday extended Tuesday's sharp gains and posted an 8-1/2 month nearest-futures high on the outlook for colder U.S. temperatures to boost heating demand for nat-gas. Forecaster Maxar Technologies said forecasts shifted cooler for the eastern U.S. from October-14-18, and Atmospheric G2 said "a complex frontal system" will drive cooler-than-average weather into the central, southern, and eastern U.S. into mid-October.
Lower-48 state dry gas production Wednesday was 100.3 bcf/day (-0.4% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 68.7 bcf/day, -0.9% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals on Wednesday were 12.6 bcf/day or +4.5% 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 96% full as of October 2, above the 5-year seasonal average of 88% full for this time of year. U.S. nat-gas inventories as of September 22 were +6.0% 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 last 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 +94 bcf.
Last Thursday's weekly EIA report of +90 bcf for the week ended September 22 was slightly bearish for nat-gas prices since it was above expectations of +89 bcf and above the 5-year average for this time of year at +84 bcf. As of September 22, nat-gas inventories were up +12.8% y/y and were +6.0% 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 29 fell by -2 to 116 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.
