July Nymex natural gas (NGN25) on Tuesday closed down by -0.161 (-4.35%).
July nat-gas prices Tuesday fell for a third consecutive session and sank to a 1-week low. Nat-gas prices are under pressure due to forecasts for cooler US temperatures that will potentially reduce nat-gas demand from electricity providers to run air conditioning. Forecaster Atmospheric G2 said Tuesday that forecasts shifted cooler for parts of the southwestern and south-central US for June 29-July 3.
An easing of geopolitical risks also pushed natural-gas prices lower on Tuesday following the announcement of a ceasefire between Israel and Iran. The ceasefire reduces the likelihood that Iran will close the Strait of Hormuz and disrupt LNG shipments through that Strait, which accounts for approximately 20% of global LNG trade.
Lower-48 state dry gas production on Tuesday was 104.4 bcf/day (+0.9% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 80.3 bcf/day (+2.2% y/y), according to BNEF. LNG net flows to US LNG export terminals on Tuesday were 14.7 bcf/day (+13.6% 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 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.
Last 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 last 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.
