Aug Nymex natural gas (NGQ23) on Thursday closed up +0.033 (+1.24%), reversing some of the overall -7.7% sell-off seen on Tuesday and Wednesday.
Nat-gas prices on Thursday saw a boost from the +76 bcf increase in weekly EIA inventories, which was a smaller build than market expectations of +82 bcf. However, natural gas prices continued to be undercut by forecasts that the excessive heat in Texas will start to moderate this weekend, although those hot temperatures are expected to shift towards the central Mississippi Valley.
Lower-48 state dry gas production on Thursday was 101.8 bcf/day (+5.4% y/y), according to BNEF, which was a new record high. Lower-48 state gas demand Thursday was 71.7 bcf/day, +1.3% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Thursday were 12.7 bcf/day or +17% w/w.
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.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported on June 28 that total U.S. electricity output in the week ended June 24 fell -6.5% y/y to 83,677 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending June 23 fell -0.9 y/y to 4,062,665 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. U.S. nat-gas inventories are still well above normal.
Thursday's weekly EIA report of +76 bcf for the week ended June 23 was bullish for nat-gas prices since it was below the market estimate of +82 bcf and the 5-year average increase for the week of +80 bcf. Nat-gas inventories as of June 23 were up +14.6% y/y and +14.6% 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.
