August Nymex natural gas (NGQ25) on Friday closed up +0.023 (+0.65%).
Aug nat-gas prices on Friday settled higher on forecasts for excessive heat next week in the US. Vaisala said forecasts remain above normal for the July 22-26 period across the US, with highs in the mid-90s expected in the middle of the country, which could boost nat-gas demand from electricity providers to meet increased air conditioning usage. Also, forecaster Atmospheric G2 said Friday that forecasts shifted hotter over the south-central and southwestern US for July 28-August 1.
However, gains in nat-gas prices were limited due to abundant US nat-gas supplies and the outlook for higher US nat-gas production. As of July 11, nat-gas inventories were +6.2% above their 5-year seasonal average. Also, a weekly report from Baker Hughes showed the number of active US nat-gas drilling rigs rose to a 17-month high on Friday, which portends to higher nat-gas production in the near term.
Lower-48 state dry gas production on Friday was 108.3 bcf/day (+5.3% y/y), according to BNEF. Lower-48 state gas demand on Friday was 78 bcf/day (-0.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 15.5 bcf/day (-1.2% 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 (lower-48) electricity output in the week ended July 12 rose +1.1% y/y to 98,133 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 12 rose +2.4% y/y to 4,248,982 GWh.
Thursday’s weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended July 11 rose +46 bcf, above the consensus of +45 bcf and the 5-year average of +41 bcf for the week. As of July 11, nat-gas inventories were down -4.9% y/y, but were +6.2% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 15, gas storage in Europe was 63% full, compared to the 5-year seasonal average of 72% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending July 18 rose by +9 to a 17-month high of 117 rigs. In the past ten months, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024.
