August Nymex natural gas (NGQ25) on Thursday closed up +0.017 (+0.55%).
Aug nat-gas prices posted moderate gains on Thursday after weekly EIA nat-gas inventories rose less than expected. The EIA reported nat-gas inventories for the week ended July 18 rose +23 bcf, below expectations of +27 bcf and also below the five-year average for this time of year of +30 bcf.
Gains in nat-gas prices were limited on the outlook for cooler US weather, which would curb nat-gas demand from electricity providers for air conditioning usage. Forecaster Vaisala stated on Thursday that the current hot temperatures in the eastern half of the US are expected to dissipate next week, and that temperatures are forecast to return to near-normal levels in the western half of the US for August 3-7.
Also, stronger US nat-gas output is weighing on prices with recent production 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 18 rose by +9 to a 17-month high of 117 rigs.
Lower-48 state dry gas production on Thursday was 107.1 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 82.4 bcf/day (+0.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 15.0 bcf/day (-4.6% 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 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.
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 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.
