September Nymex natural gas (NGU25) on Thursday closed up +0.061 (+2.00%).
Sep nat-gas prices on Thursday recovered from a 3.25-month low and settled higher after forecasts for warmer US weather sparked short-covering in nat-gas futures. Forecaster Atmospheric G2 said Thursday that forecasts shifted warmer for the western half of the US for August 5-9, with above-average temperatures seen expanding across the Southwest and Texas, which will boost nat-gas demand from electricity providers to power air-conditioning usage.
Nat-gas prices initially tumbled to a 3.25-month low Thursday after weekly nat-gas supplies rose more than expected. The EIA reported that nat-gas inventories rose +48 bcf in the week ended July 25, higher than expectations of +41 bcf and well-above the five-year average for this time of year at +24 bcf.
In addition, higher US nat-gas production is weighing on prices as recent US nat-gas output is up year-over-year. Moreover, expectations for even higher US nat-gas production are also weighing on nat-gas prices after last Friday's weekly report from Baker Hughes showed that the number of active US nat-gas drilling rigs in the week ending July 25 rose by +5 to a nearly 2-year high of 122 rigs.
Lower-48 state dry gas production on Thursday was 107.8 bcf/day (+2.4% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 80.5 bcf/day (-7.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 14.9 bcf/day (-2.4% 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 July 26 rose +8.1% y/y to 98,772 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 26 rose +2.7% y/y to 4,258,448 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended July 25 rose +48 bcf, above the consensus of +41 bcf and the 5-year average of +24 bcf for the week. As of July 25, nat-gas inventories were down -3.9% y/y, but were +6.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 29, gas storage in Europe was 68% full, compared to the 5-year seasonal average of 76% 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 July 25 rose by +5 to a nearly 2-year high of 122 rigs. In the past ten months, 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.
