Aug Nymex natural gas (NGQ23) on Friday closed -0.044 (-1.60%).
Nat-gas prices Friday gave up early gains and posted moderate losses on ample U.S. gas supplies, with U.S. nat-gas inventories more than +13% above their 5-year seasonal average. Nat gas prices retreated Friday despite record-high temperatures in the western and southwestern U.S. that are boosting nat-gas demand from electricity providers to power air-conditioning.
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 82% full as of July 17, well above the 5-year seasonal average of 67% full for this time of year. U.S. nat-gas inventories as of July 14 were +13.8% above their 5-year seasonal average.
Lower-48 state dry gas production on Friday was 98.7 bcf/day (+1.3% y/y), according to BNEF. Lower-48 state gas demand Friday was 73.7 bcf/day, -7.7% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Friday were 12.1 bcf/day or -4.4% w/w.
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 July 15 rose +2.2% y/y to 94,718 GWh (gigawatt hours). However, cumulative U.S. electricity output in the 52-week period ending July 15 fell -1.1% y/y to 4,062,708 GWh.
Thursday's weekly EIA report of +41 bcf for the week ended July 14 was bullish for nat-gas prices since it was below the estimate of +45 bcf. However, as of July 14, nat-gas inventories were up +23.7% y/y and +13.8% above their 5-year seasonal average.
Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ended July 21 fell by two rigs to 131 rigs, moderately above the 1-1/4 year low of 124 rigs from the week of June 30. Active rigs rose to a 3-3/4 year high of 166 rigs in September 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.
