July Nymex natural gas (NGN23) on Thursday closed up +0.023 (+0.99%).
July nat-gas Thursday recovered from early losses and closed moderately higher. July nat-gas prices Thursday initially whipsawed lower on Thursday's weekly EIA nat-gas inventory report. Nat-gas spiked higher briefly after the EIA report showed nat-gas inventories rose +104 bcf, below expectations of +114 bcf. However, prices then whipsawed lower as the +104 bcf increase was above the 5-year average for this time of year of +100 bcf.
Nat-gas prices then recovered their losses Thursday afternoon and moved higher on forecasts for warmer U.S. weather, which will boost nat-gas demand from electricity providers to cover increased air-conditioning usage. Forecaster Atmospheric G2 said above-normal temperatures are expected Jun 13-17 in Texas, the top gas-consuming state. Also, the warmer-than-normal temperatures will expand into the northern states from June 17-22.
Nat-gas prices fell sharply starting in December and posted a 2-3/4 year nearest-futures low (NGK23) Apr 14 as abnormally mild weather across the northern hemisphere this past winter eroded heating demand for nat-gas. January was the sixth-warmest across the contiguous 48 U.S. states in data from 1895. This winter's warm temperatures have caused rising nat-gas inventories in Europe and the United States. Gas storage across Europe was 70% full as of June 4, well above the 5-year seasonal average of 53% full for this time of year. Nat-gas inventories in the U.S. were +16.1% above their 5-year seasonal average as of June 2.
Lower-48 state dry gas production on Thursday was 99.2 bcf (+1.9% y/y), moderately below the record high of 101.7 bcf posted on Apr 23, according to BNEF. Lower-48 state gas demand Thursday was 66.8 bcf/day, down -0.3% y/y, according to BNEF. On Thursday, LNG net flows to U.S. LNG export terminals were 11.7 bcf, down -7% w/w. On Apr 16, LNG net flows to U.S. LNG export terminals rose to a record 14.9 bcf/day as nat-gas exports continue to increase from the Freeport LNG terminal as the terminal was partially reopened after being closed since last June because of an explosion.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended June 3 fell -5.2% y/y to 76,617 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending June 3 fell -0.3% y/y to 4,086,219 GWh.
Thursday's weekly EIA report was neutral for nat-gas prices since it showed U.S. nat gas inventories rose +104 bcf, below expectations of +114 bcf but above the five-year average for this time of year at 100 bcf. Nat-gas inventories as of June 2 are +16.1% 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 2 was unchanged at a 14-month low of 137 rigs, moderately below the 3-1/4 year high of 166 rigs posted in the week ended Sep 9. 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.
