July Nymex natural gas (NGN25) on Tuesday closed down by -0.161 (-4.35%).
July nat-gas prices Tuesday fell for a third consecutive session and sank to a 1-week low. Nat-gas prices are under pressure due to forecasts for cooler US temperatures that will potentially reduce nat-gas demand from electricity providers to run air conditioning. Forecaster Atmospheric G2 said Tuesday that forecasts shifted cooler for parts of the southwestern and south-central US for June 29-July 3.
An easing of geopolitical risks also pushed natural-gas prices lower on Tuesday following the announcement of a ceasefire between Israel and Iran. The ceasefire reduces the likelihood that Iran will close the Strait of Hormuz and disrupt LNG shipments through that Strait, which accounts for approximately 20% of global LNG trade.
Lower-48 state dry gas production on Tuesday was 104.4 bcf/day (+0.9% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 80.3 bcf/day (+2.2% y/y), according to BNEF. LNG net flows to US LNG export terminals on Tuesday were 14.7 bcf/day (+13.6% 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 June 14 rose +0.8% y/y to 85,329 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 14 rose +2.9% y/y to 4,246,808 GWh.
Last Wednesday's weekly EIA report was mixed for nat-gas prices since nat-gas inventories for the week ended June 13 rose +95 bcf, below expectations of +97 bcf but well above the 5-year average build for this time of year of +72 bcf. As of June 13, nat-gas inventories were down -8.0% y/y and +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 54% full as of June 16, versus the 5-year seasonal average of 64% 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 June 20 fell by -2 to 111 rigs, slightly below the 15-month high of 114 rigs from June 6. In the past nine months, gas rigs have risen from the 4-year low of 94 rigs posted 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.
