June Nymex natural gas (NGM25) on Thursday closed down by -0.130 (-2.72%).
June nat-gas prices on Thursday sank to a 2-week low and settled sharply lower on a greater-than-average build in weekly inventories. The EIA reported Thursday that nat-gas inventories rose by +110 bcf for the week ended May 9, well above the five-year average for the week of +83 bcf.
On Thursday, losses in nat-gas prices were contained on forecasts for warmer US temperatures that will boost power demand for air-conditioning. The Commodity Weather Group on Thursday said that weather forecasts shifted warmer for the Midwest and eastern half of the US on May 25-29 in the US East and Midwest.
Lower-48 state dry gas production Thursday was 104.6 bcf/day (+4.1% y/y), according to BNEF. Lower-48 state gas demand Thursday was 64.8 bcf/day (-5.8% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 14.6 bcf/day (-2.2% 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 Wednesday that total US (lower-48) electricity output in the week ended May 10 fell -2.8% y/y to 72,735 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 10 rose +3.6% y/y to 4,251,600 GWh.
Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 9 rose +110 bcf, right on expectations but well above the 5-year average build for this time of year of +83 bcf. As of May 9, nat-gas inventories were down -14.6% y/y and +2.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 43% full as of May 11, versus the 5-year seasonal average of 53% 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 9 was unchanged at 101 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).
