July Nymex natural gas (NGN25) on Wednesday closed down by -0.131 (-3.70%).
July nat-gas prices on Wednesday extended this week’s slide and fell to a 2-week low. Prices are lower on forecasts for cooling US temperatures and the outlook for US nat-gas supplies to remain plentiful. The Commodity Weather Group said Wednesday that the outlook is for a cool-down in the eastern half of the US for the later period of June 20-July 4 behind a cold front, which should curb nat-gas demand from electricity providers to run air conditioning.
Another bearish factor is the consensus is for Thursday’s weekly EIA nat-gas inventories to climb by 88 bcf for the week ended June 20, above the five-year average of +79 bcf for his time of year.
An easing of geopolitical risks is also bearish for nat-gas prices due to the Israel-Iran ceasefire. 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 Wednesday was 105.9 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 79.9 bcf/day (-0.4% y/y), according to BNEF. LNG net flows to US LNG export terminals on Wednesday were 14.7 bcf/day (+9.2% 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 June 21 fell -3.1% y/y to 91,334 GWh (gigawatt hours), although US electricity output in the 52-week period ending June 21 rose +2.6% y/y to 4,243,923 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 57% full as of June 23, versus the 5-year seasonal average of 66% 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.
