October Nymex natural gas (NGV25) on Thursday closed down -0.095 (-3.14%).
Oct nat-gas prices dropped to a 1-week low on Thursday due to a higher-than-expected build in weekly nat-gas stockpiles. Thursday's weekly EIA report showed that nat-gas inventories rose +71 bcf in the week ended September 5, above expectations of +68 bcf and the five-year average of +56 bcf.
Further downside in nat-gas prices in the near term appears limited due to forecasts for warmer US weather, which will boost nat-gas demand from electricity providers to power the increased air conditioning usage. Forecaster Vaisala said Thursday that forecasts shifted warmer in the East for September 16-20, and above normal temperatures are forecast to persist throughout the country for September 21-25.
Higher US nat-gas production has recently been a bearish factor for prices. On Tuesday, 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 Thursday was 107.3 bcf/day (+7.0% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 71.7 bcf/day (-1.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 14.6 bcf/day (-3.9% 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 September 6 rose +1.03% y/y to 83,003 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 6 rose +2.97% y/y to 4,264,559 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended September 5 rose +71 bcf, above the market consensus of +68 bcf and above the 5-year weekly average of +56 bcf. As of September 5, nat-gas inventories were down -1.3% y/y, but were +6.0% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 9, gas storage in Europe was 80% full, compared to the 5-year seasonal average of 86% 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 5 fell by -1 to 118 rigs, down from 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.
