July Nymex natural gas (NGN25) on Monday closed down by -0.149 (-3.87%).
July nat-gas prices on Monday extended last Friday's large losses on the outlook for extreme heat across the US to moderate, potentially reducing nat-gas demand from electricity providers to run air conditioning. Forecaster Vaisala said heat is expected to be more moderate across the eastern half of the US from June 28 to July 2, with forecasts shifting slightly cooler in the Midwest, South, and East.
Geopolitical risks from the Israel-Iran war are supportive of nat-gas prices, as concerns persist that any attempt by Iran to close the Strait of Hormuz could disrupt LNG shipments through that Strait, which accounts for about 20% of global LNG trade.
Lower-48 state dry gas production Sunday was 106.1 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Sunday was 71.8 bcf/day (-4.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Sunday were 14.0 bcf/day (+2.6% 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 June 14 rose +0.8% y/y to 85,329 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 14 rose +2.9% y/y to 4,246,808 GWh.
Last Wednesday's weekly EIA report was mixed for nat-gas prices since nat-gas inventories for the week ended June 13 rose +95 bcf, below expectations of +97 bcf but well above the 5-year average build for this time of year of +72 bcf. As of June 13, nat-gas inventories were down -8.0% y/y and +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 54% full as of June 16, versus the 5-year seasonal average of 64% 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 June 20 fell by -2 to 111 rigs, slightly below the 15-month high of 114 rigs from June 6. In the past nine months, gas rigs have risen from the 4-year low of 94 rigs posted 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.
