July Nymex natural gas (NGN25) on Tuesday closed down by -0.102 (-2.81%).
July nat-gas prices on Tuesday extended Monday’s sharp losses and posted a 1-week low. Nat-gas prices were under pressure Tuesday on the outlook for cooler US temperatures to curb nat-gas demand and allow inventory levels to build. As of May 30, nat-gas inventories were +4.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. Also, last Friday’s weekly report from Baker Hughes showed active US nat-gas rigs rose to a 15-month high, signaling higher production in the near term.
Forecasts for cooler US temperatures that will potentially curb nat-gas demand from electricity providers to run air-conditioning are also weighing on nat-gas prices. The Commodity Weather Group said forecasts have shifted cooler for the East Coast for June 14-18.
Lower-48 state dry gas production Tuesday was 104.3 bcf/day (+2.4% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 69.8 bcf/day (+0.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 13.5 bcf/day (+5.5% 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 last Wednesday that total US (lower-48) electricity output in the week ended May 31 fell -1.8% y/y to 76,711 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 31 rose +3.28% y/y to 4,248,428 GWh.
Last Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 30 rose +122 bcf, above expectations of +113 bcf and well above the 5-year average build for this time of year of +98 bcf. As of May 30, nat-gas inventories were down -10.4% y/y and +4.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 51% full as of June 8, versus the 5-year seasonal average of 62% 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 6 rose +5 to a 15-month high of 114 rigs, moderately 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).
