October Nymex natural gas (NGV25) on Thursday closed up +0.058 (+2.01%).
Oct nat-gas prices on Thursday added to Wednesday's gains and posted a 1-week high after weekly stockpiles rose less than expected. The EIA reported Thursday that nat-gas inventories rose +18 bcf in the week ended August 22, below the consensus of +27 bcf.
A mixed weather report also supported nat-gas prices after forecaster Atmospheric G2 said Thursday that early-autumn coolness will spread over the eastern two-thirds of the US, while above-normal temperatures bake the West Coast for September 2-6.
Natural gas prices have been under pressure over the past 2.5 months, dropping to a 9.5-month low in nearest-futures prices on Monday, as forecasts for cooler late-summer weather emerged. Forecaster Vaisala said it expects lower-than-normal temperatures to blanket the US from North Carolina to Northern California from September 4-8, which will reduce demand for natural gas to run air conditioning.
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 Thursday was 107.1 bcf/day (+3.1% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 72.4 bcf/day (-15.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 15.4 bcf/day (+0.6% 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 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.
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 August 26, gas storage in Europe was 76% full, compared to the 5-year seasonal average of 84% 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 22 was unchanged at 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.
