July nat-gas prices on Friday closed higher on carry-over support from a +6% surge in European natural gas prices that was prompted by Israel’s military attack on Iran. There is concern that any attempt by Iran to close the Strait of Hormuz could disrupt LNG shipments through that Strait, which account for about 20% of global LNG trade. Also, Israel temporarily shut down its Leviathan gas field due to security concerns, which disrupted gas pipeline shipments to Egypt.
Nat-gas prices also saw support from forecasts for hotter temperatures to move across the US. Vaisala forecasted that nearly all of the US will see above-normal temperatures from June 23-27, which would boost nat-gas demand from utilities to run air conditioning.
Lower-48 state dry gas production Friday was 105.4 bcf/day (+3.2% y/y), according to BNEF. Lower-48 state gas demand Friday was 70.3 bcf/day (-5.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 13.8 bcf/day (+1.3% 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 7 fell -2.7% y/y to 82,114 GWh (gigawatt hours), although US electricity output in the 52-week period ending June 7 rose +3.0% y/y to 4,246,137 GWh.
Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended June 6 rose +109 bcf, above expectations of +108 bcf and well above the 5-year average build for this time of year of +87 bcf. As of June 6, nat-gas inventories were down -9.0% y/y and +5.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 52% full as of June 10, versus the 5-year seasonal average of 62% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending June 13 fell by -1 to 113, falling back from the previous week’s 15-month high of 114 rigs. In the past nine months, gas rigs have risen from the 4-year low of 94 rigs posted in September 2024.
