July Nymex natural gas (NGN25) on Friday closed down by -0.142 (-3.56%).
July nat-gas prices on Friday retreated from a 2-1/2 month nearest-futures high and settled sharply lower. Long liquidation pressures pushed nat-gas prices lower on Friday, as forecasts for US weather to return to normal from excessive heat starting next month could potentially curb nat-gas demand from electricity providers to run air conditioning. The Commodity Weather Group on Friday said mostly normal temperatures are expected across the eastern two-thirds of the US for June 30-July 4.
Geopolitical risks from the Israel-Iran war are supportive for 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 Friday was 106.7 bcf/day (+3.3% y/y), according to BNEF. Lower-48 state gas demand on Friday was 69.8 bcf/day (-11.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 13.8 bcf/day (+0.3% 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 +95 bcf, 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 on Friday that the number of active US nat-gas drilling rigs in the week ending June 20 fell by -2 to 111 rigs, slightly below the 15-month high of 114 rigs from June 6. In the past nine months, gas rigs have risen from the 4-year low of 94 rigs posted in September 2024.
