October Nymex natural gas (NGV24) on Wednesday closed up by +0.086 (+3.37%).
Oct nat-gas prices Wednesday rose sharply on the outlook for warmer US temperatures that will boost nat-gas demand from electricity providers to run air conditioning. On Wednesday, the Commodity Weather Group said that warmer-than-normal weather is expected across most of the US from September 30 to October 4.
Nat-gas prices fell back from their best levels Wednesday after updated forecasts project Hurricane Helene to make landfall on the US Gulf Coast farther east than previous projections, sparing most US Gulf offshore nat-gas platforms. The US National Hurricane Center said the storm is expected to strengthen into a possible Category 3 hurricane as it moves north through the Gulf of Mexico and makes landfall near the Florida panhandle. According to the EIA, 5% of total US dry nat-gas production comes from the Gulf of Mexico, and 51% of total US nat-gas processing plant capacity is located along the US Gulf coast.
Lower-48 state dry gas production Wednesday was 100.1 bcf/day (-1.6% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 72.7 bcf/day (+4.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 12.2 bcf/day (-3.0% w/w), according to BNEF.
An increase in US electricity output is positive for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US electricity output in the week ended September 21 rose +9.23% y/y to 83,729 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 21 rose +1.66% y/y to 4,149,047 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories for the week ended September 20 will climb by +52 bcf.
Last Thursday's weekly EIA report was mildly bearish for nat-gas prices since nat-gas inventories for the week ended September 13 rose +58 bcf, above expectations of +56 but well below the 5-year average build for this time of year of +80 bcf. As of September 13, nat-gas inventories were up +5.4% y/y and were +8.6% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 94% full as of September 22, above the 5-year seasonal average of 89% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending September 20 fell by -1 rigs to 96 rigs, just above the 3-1/3 year low from September 6 of 94 rigs. Active rigs have fallen since posting a 5-year high of 166 rigs in Sep 2022, up from the pandemic-era 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.
