Nat-Gas Prices Undercut by Cooler US Temps and Ample Supplies
July Nymex natural gas (NGN25) on Thursday closed down by -0.035 (-0.98%).
July nat-gas prices on Thursday extended Wednesday's plunge and fell to a 1-1/2 week low on forecast for cooler US weather and a build in nat-gas inventories. The Commodity Weather Group said Thursday that forecasts have turned cooler for the central US for June 3-7, which could curb nat-gas demand from electricity providers to run air conditioning.
Abundant US nat-gas supplies also weighed on prices after Thursday's weekly EIA nat-gas inventories rose by +101 bcf for the week ended May 23, right on expectations but above the five-year average for this time of year of +98 bcf.
Lower-48 state dry gas production Thursday was 106.2 bcf/day (+3.7% y/y), according to BNEF. Lower-48 state gas demand Thursday was 69.0 bcf/day (+4.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 14.4 bcf/day (+2.4% w/w), according to BNEF.
A decline in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported Thursday that total US (lower-48) electricity output in the week ended May 24 fell -4.4% y/y to 77,837 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 24 rose +3.25% y/y to 4,249,859 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 23 rose +101 bcf, right on expectations, but above the 5-year average build for this time of year of +98 bcf. As of May 23, nat-gas inventories were down -11.7% y/y and +3.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 47% full as of May 26, versus the 5-year seasonal average of 58% 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 May 23 fell -2 to 98 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).
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.