November Nymex natural gas (NGX23) on Thursday closed +0.204 (+6.89%).
Nat-gas prices on Thursday surged to an 8-1/2 month nearest-futures high and closed sharply higher on a smaller-than-expected gain in weekly EIA nat-gas inventories. EIA nat-gas inventories rose +86 bcf, below expectations of +94 bcf. Nat-gas also has support 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 Thursday was 99.9 bcf/day (-0.3% y/y), according to BNEF. Lower-48 state gas demand Thursday was 66.2 bcf/day, -0.4% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals on Thursday were 12.6 bcf/day or +3.6% 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 29 were +5.3% above their 5-year seasonal average.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended September 30 rose +9.1% y/y to 77,239 GWh (gigawatt hours), and cumulative U.S. electricity output in the 52-week period ending September 30 fell -0.8% y/y to 4,087,619 GWh.
Thursday's weekly EIA report of +86 bcf for the week ended September 29 was bullish for nat-gas prices since it was below expectations of +94 bcf and below the 5-year average for this time of year at +103 bcf. As of September 29, nat-gas inventories were up +10.9% y/y and were +5.3% 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.
