June Nymex natural gas (NGM25) on Wednesday closed down by -0.060 (-1.77%).
June nat-gas prices settled moderately lower on Wednesday, based on the expectations of higher US nat-gas supplies. Thursday's weekly EIA nat-gas inventories are expected to climb +109 bcf, well above the five-year average for this time of year of +58 bcf, as warm spring temperatures allow US supplies to build. Also, NatGasWeather said Wednesday that near-normal weather across the US through May 14 will keep demand for nat-gas light, allowing inventories to climb even more.
Last Thursday, nat-has prices tumbled to a 5-month nearest-futures low as the warm US spring weather has dampened heating demand for nat-gas and allowed supplies to rebuild. Last Thursday's weekly EIA report showed nat-gas inventories rose +88 bcf for the week ended April 18, higher than expectations of +75 bcf and well above the five-year average for this time of year of +58 bcf.
Last month, nat-gas rallied to a 2-year high on signs that US nat-gas storage levels could remain tight ahead of the summer air-conditioning season. BloombergNEF projects that US gas storage will be 10% below the five-year average this summer.
Lower-48 state dry gas production Wednesday was 105.7 bcf/day (+5.7 y/y), according to BNEF. Lower-48 state gas demand Wednesday was 67.8 bcf/day (-1.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 15.8 bcf/day (+4.4% 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 April 26 rose +5.2% y/y to 73,210 GWh (gigawatt hours), and US electricity output in the 52-week period ending April 26 rose +3.8% y/y to 4,252,848 GWh.
In a bullish longer-term factor for nat-gas prices, President Trump lifted the Biden administration's pause on approving gas export projects in January, thus moving into active consideration a backlog of about a dozen LNG export projects. Increased US capacity for exporting LNG would boost demand for US nat-gas and support nat-gas prices.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended April 18 rose +88 bcf, above expectations of +75 bcf and well above the 5-year average build for this time of year of +58 bcf. As of April 18, nat-gas inventories were down -20.2% y/y and -2.3% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 39% full as of April 27, versus the 5-year seasonal average of 49% 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 April 25 rose +1 to 99 rigs, modestly above the 4-year low of 94 rigs posted on September 6, 2024. Active rigs have fallen since posting a 5-1/2 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
