August Nymex natural gas (NGQ25) on Tuesday closed up +0.093 (+3.11%).
Aug nat-gas prices settled sharply higher Tuesday as forecasts for hotter US weather sparked short covering in nat-gas futures. Forecaster Vaisala on Tuesday said that above-normal temperatures are forecast for the West and the East for the August 8-12 period, which will boost nat-gas demand from electricity providers to power increased air-conditioning usage.
Nat-gas prices had tumbled to a 3-month low Monday due to more temperate US weather forecasts and higher US nat-gas production, with recent US nat-gas output up year-over-year. In addition, expectations for even higher US nat-gas production are also weighing on nat-gas prices after last Friday's weekly report from Baker Hughes showed that the number of active US nat-gas drilling rigs in the week ending July 25 rose by +5 to a nearly 2-year high of 122 rigs.
Lower-48 state dry gas production on Tuesday was 108.1 bcf/day (+3.2% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 86.0 bcf/day (+7.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 15.3 bcf/day (+2.6% 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 last Wednesday that total US (lower-48) electricity output in the week ended July 19 rose +2.1% y/y to 99,373 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 19 rose +2.4% y/y to 4,251,059 GWh.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 18 rose +23 bcf, below the consensus of +27 bcf and the 5-year average of +30 bcf for the week. As of July 18, nat-gas inventories were down -4.8% y/y, but were +5.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 22, gas storage in Europe was 66% full, compared to the 5-year seasonal average of 74% 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 July 25 rose by +5 to a nearly 2-year high of 122 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.
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.
