July Nymex natural gas (NGN25) on Wednesday closed up by +0.138 (+3.58%).
July nat-gas prices on Wednesday extended this week’s rally and climbed to a 2-1/2 month nearest-futures high. The outlook for sweltering US temperatures, which will boost nat-gas demand from electricity providers to run air conditioning, is supporting prices. Forecaster Atmospheric G2 said on Wednesday that the outlook remains for a major heatwave over the eastern half of the US during the first half of next week.
Nat-gas prices remained higher Wednesday after weekly EIA inventories rose +95 bcf, below expectations of +97 bcf but above the five-year average for this time of year of +72 bcf.
Geopolitical risks from the Israel-Iran war also support nat-gas prices on concern 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 Wednesday was 105.2 bcf/day (+2.4% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 73.4 bcf/day (-4.6% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 13.8 bcf/day (-2.7% 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 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.
Wednesday’s weekly EIA report was mixed for nat-gas prices since nat-gas inventories for the week ended June 13 rose +95bcf, 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 13 fell by -1 to 113, falling back from the previous week’s 15-month high of 114 rigs. In the past nine months, gas rigs have risen from the 4-year low of 94 rigs posted in September 2024.
