October Nymex natural gas (NGV25) on Tuesday closed up +0.047 (+1.67%).
Oct nat-gas prices recovered from a 4-week low on Tuesday and moved higher after forecasts for hotter US temperatures sparked short covering in nat-gas futures. Forecaster Atmospheric G2 said Tuesday that forecasts shifted warmer across the central and northern US for September 28-October 2, which could boost nat-gas demand from electricity providers to power increased air conditioning usage.
Nat-gas prices on Tuesday initially moved lower and have been under pressure over the past three sessions due to signs of abundant US nat-gas supplies. As of September 12, US nat-gas inventories were +6.3% above their 5-year seasonal average, a bearish factor for prices.
Higher US nat-gas production has recently been a bearish factor for prices. Earlier this month, 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 Tuesday was 107.4 bcf/day (+4.8% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 75.4 bcf/day (+3.7% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 14.4 bcf/day (-5.8% 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 September 13 rose +0.83% y/y to 81,346 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 13 rose +2.98% y/y to 4,265,230 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended September 12 rose +90 bcf, above the market consensus of +81 bcf and above the 5-year weekly average of +74 bcf. As of September 12, nat-gas inventories were down -0.3% y/y, but were +6.3% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 21, gas storage in Europe was 82% full, compared to the 5-year seasonal average of 88% 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 19 was unchanged at 118 rigs, slightly 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 4.5-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.
