September Nymex natural gas (NGU25) on Monday closed down -0.151 (-4.90%).
Sep nat-gas prices on Monday tumbled to a 3.5-month low and settled sharply lower. Ramped-up US nat gas production is undercutting prices as recent US nat-gas output is up year-over-year. Also, expectations for even higher US nat-gas production are 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 August 1 rose by +2 rigs to a 2-year high of 124 rigs.
The outlook for cooler US temperatures that will reduce nat-gas demand from electricity providers for air conditioning usage is also weighing on nat-gas prices. Forecaster Atmospheric G2 said Monday that forecasts shifted colder for the central and eastern US for August 9-13.
Lower-48 state dry gas production on Monday was 108.1 bcf/day (+3.5% y/y), according to BNEF. Lower-48 state gas demand on Monday was 74.2 bcf/day (-8.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 15.3 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 last 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.
Last 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 30, 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 August 1 rose by +2 to a 2-year high of 124 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.
