October Nymex natural gas (NGV25) on Wednesday closed up +0.055 (+1.83%).
Oct nat-gas prices on Wednesday added to Tuesday's gains and posted a 4-week high on forecasts for warmer temperatures in the northern half of the US, which will boost nat-gas demand from electricity providers to power air conditioning. On Wednesday, forecaster Atmospheric G2 said forecasts shifted warmer for the middle of the country for September 8-12, and temperatures also trended warmer over the northern half of the country for September 13-17.
Natural gas prices have been under pressure over the past 2.5 months, dropping to a 9.5-month low in nearest-futures prices last Monday, as forecasts for cooler late-summer weather emerged and as US gas production remains near a record high.
Ramped-up US nat-gas production is another bearish factor for prices. On August 12, the EIA raised its forecast for 2025 US nat-gas production by +0.5% to 106.44 bcf/day from July's estimate of 105.9 bcf/day. The EIA raised its forecast for 2026 US nat-gas production by +0.7% to 106.09 from July's 105.4 bcf/day forecast. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Wednesday was 105.7 bcf/day (+3.3% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 74.0 bcf/day (+2.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.0 bcf/day (-0.5% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended August 23 rose +7.7% y/y to 95,130 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 23 rose +3.1% y/y to 4,270,960 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +75 bcf for the week ended August 29, well above the five-year average for this time of year of +36 bcf.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 22 rose +18 bcf, below the consensus of +27 bcf and well below the 5-year weekly average of +38 bcf. As of August 22, nat-gas inventories were down -3.5% y/y, but were +5.0% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 1, gas storage in Europe was 78% full, compared to the 5-year seasonal average of 85% 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 August 29 fell by -3 to 122 rigs, just below the 2-year high of 124 rigs posted on August 1. In the past year, 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.
