Aug nat-gas prices on Tuesday extended the 4-session rally and posted a new 1.5-week high. The main bullish factor was warmer US weather forecasts, which would boost nat-gas demand from electricity providers to meet increased air conditioning usage. Nat-gas prices were also supported on near-record LNG exports.
NatGasWeather said the 8-15 day forecast is for highs in the upper 80s to 100s in most of the US, especially California, the Southwest, and Texas.
Lower-48 state dry gas production on Tuesday was 107.0 bcf/day (+3.0% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 79.5 bcf/day (-6.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 15.2 bcf/day (-1.0% 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 last 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.
Last 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 Friday that the number of active US nat-gas drilling rigs in the week ending July 11 was unchanged at 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.
