August Nymex natural gas (NGQ25) on Thursday closed up sharply by +0.123 (+3.83%).
Aug nat-gas prices on Thursday settled sharply higher due to a smaller-than-expected build in weekly inventories. The EIA reported that nat-gas inventories rose by +53 bcf in the week ended July 4, below expectations of +61 bcf. Forecasts for hotter temperatures in the West also gave nat-gas prices a boost after forecaster Vaisala said above-normal temperatures are expected to persist in the West July 20-24.
On Wednesday, nat-gas prices tumbled to a 6-week low due to cooler US weather forecasts after Vaisala said that forecasts shifted cooler in the Midwest for July 14-18 and weather outlooks shifted cooler for the eastern half of the US for July 19-23. The cooler temperatures should reduce nat-gas demand from electricity providers to power air conditioning.
Lower-48 state dry gas production on Thursday was 106.3 bcf/day (+4.1% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 76.8 bcf/day (-8.7% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 15.5 bcf/day (+4.0% 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 5 rose +1.0% y/y to 93,747 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 5 rose +2.4% y/y to 4,247,938 GWh.
Thursday’s weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 4 rose +53 bcf, below the consensus of +61 bcf and right on the 5-year average for the week. As of July 4, nat-gas inventories were down -6.0% y/y, but were +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 8, gas storage in Europe was 61% full, compared to the 5-year seasonal average of 71% full for this time of year.
Baker Hughes reported last Thursday that the number of active US nat-gas drilling rigs in the week ending July 4 fell by -1 to 108 rigs, slightly below the 15-month high of 114 rigs posted on June 6. In the past nine 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.
