October Nymex natural gas (NGV25) on Wednesday closed down -0.088 (-2.82%).
Oct nat-gas prices retreated on Wednesday due to the prospects for US gas inventories to build in the near term. Due to seasonal pipeline maintenance along the Gulf Coast, nat-gas exports are set to decline, which will boost nat-gas supplies in storage. Thursday's weekly EIA nat-gas inventories are expected to climb +69 bcf in the week ended September 5, above the five-year average of +56 bcf.
The downside in nat-gas prices in the near term appears limited due to forecasts for warmer US weather, which will boost nat-gas demand from electricity providers to power the increased air conditioning usage. Forecaster Vaisala said Wednesday that forecasts shifted warmer in the Midwest and East for September 15-19, with above normal temperatures expected in the middle of the US. Also, forecasts shifted warmer in the East for September 20-24.
Higher US nat-gas production has recently been a bearish factor for prices. On Tuesday, the EIA raised its forecast for 2025 US nat-gas production by +0.2% to 106.63 bcf/day from August's estimate of 106.40 bcf/day. 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 107.2 bcf/day (+5.9% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 70.6 bcf/day (-2.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 14.4 bcf/day (-5.8% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended September 6 rose +1.03% y/y to 83,003 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 6 rose +2.97% y/y to 4,264,559 GWh.
Last Thursday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended August 29 rose +55 bcf, right in line with the market consensus, though above the 5-year weekly average of +36 bcf. As of August 29, nat-gas inventories were down -2.2% y/y, but were +5.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 7, gas storage in Europe was 79% full, compared to the 5-year seasonal average of 86% 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 5 fell by -1 to 118 rigs, down from the 2-year high of 124 rigs posted on August 1. In the past year, the number of gas rigs has risen from the 4.5-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.
