August Nymex natural gas (NGQ25) on Monday closed down -0.122 (-3.92%).
Aug nat-gas prices tumbled to a 3-month low on Monday and settled sharply lower after US weather forecasts cooled, which will reduce nat-gas demand from electricity providers for air conditioning usage. Forecaster Vaisala on Monday said that forecasts shifted cooler for the eastern half of the US for August 2-6.
Stronger US nat-gas production is also weighing on prices, with US nat-gas output up year-over-year. In addition, expectations for even higher US nat-gas production are also weighing on nat-gas prices after last Friday’s weekly report from Baker Hughes showed that the number of active US nat-gas drilling rigs in the week ending July 25 rose by +5 to a nearly 2-year high of 122 rigs.
Lower-48 state dry gas production on Monday was 108.6 bcf/day (+4.1% y/y), according to BNEF. Lower-48 state gas demand on Monday was 82.8 bcf/day (+11.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 15.0 bcf/day (+1.9% 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 19 rose +2.1% y/y to 99,373 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 19 rose +2.4% y/y to 4,251,059 GWh.
Last Thursday’s weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 18 rose +23 bcf, below the consensus of +27 bcf and the 5-year average of +30 bcf for the week. As of July 18, nat-gas inventories were down -4.8% y/y, but were +5.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 22, gas storage in Europe was 66% full, compared to the 5-year seasonal average of 74% 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 25 rose by +5 to a nearly 2-year high of 122 rigs. In the past ten months, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024.
