August Nymex natural gas (NGQ25) on Wednesday closed higher by +0.073 (+2.14%).
Aug nat-gas prices on Wednesday moved higher on the outlook for a smaller-than-average increase in weekly nat-gas inventories. Short covering emerged in nat-gas futures Wednesday on expectations that Thursday's weekly EIA nat-gas inventories will climb by +49 bcf for the week ended June 27, below the five-year average of +61 bcf for this time of year.
On Tuesday, nat-gas prices fell to a 5-week nearest-futures low on forecasts for cooler US temperatures. Forecaster Vaisala said that forecasts shifted cooler in the middle of the country for July 6-10 and shifted cooler across the southern states for July 11-15. The cooler weather should potentially curb nat-gas demand from electricity providers to power air conditioning and allow US nat-gas inventories to continue rebuilding. As of June 20, EIA nat-gas inventories were +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies.
Lower-48 state dry gas production on Wednesday was 107.1 bcf/day (+3.7% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 75.5 bcf/day (+0.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.7 bcf/day (+6.8% 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 Wednesday that total US (lower-48) electricity output in the week ended June 28 rose +3.2% y/y to 99,357 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 28 rose +2.5% y/y to 4,246,983 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended June 20 rose +96 bcf, above the consensus of +88 bcf and the 5-year average for the week of +79 bcf. As of June 20, nat-gas inventories were down -6.6% y/y, but were +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of June 30, gas storage in Europe was 59% full, compared to the 5-year seasonal average of 68% 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 27 fell by -2 to 109 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.
