August Nymex natural gas (NGQ25) on Wednesday closed higher by +0.073 (+2.14%).
Aug nat-gas prices on Wednesday moved higher on the outlook for a smaller-than-average increase in weekly nat-gas inventories. Short covering emerged in nat-gas futures Wednesday on expectations that Thursday’s weekly EIA nat-gas inventories will climb by +49 bcf for the week ended June 27, below the five-year average of +61 bcf for this time of year.
On Tuesday, nat-gas prices fell to a 5-week nearest-futures low on forecasts for cooler US temperatures. Forecaster Vaisala said that forecasts shifted cooler in the middle of the country for July 6-10 and shifted cooler across the southern states for July 11-15. The cooler weather should potentially curb nat-gas demand from electricity providers to power air conditioning and allow US nat-gas inventories to continue rebuilding. As of June 20, EIA nat-gas inventories were +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies.
Lower-48 state dry gas production on Wednesday was 107.1 bcf/day (+3.7% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 75.5 bcf/day (+0.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.7 bcf/day (+6.8% 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 28 rose +3.2% y/y to 99,357 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 28 rose +2.5% y/y to 4,246,983 GWh.
Last Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended June 20 rose +96 bcf, above the consensus of +88 bcf and the 5-year average for the week of +79 bcf. As of June 20, nat-gas inventories were down -6.6% y/y, but were +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of June 30, gas storage in Europe was 59% full, compared to the 5-year seasonal average of 68% 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 27 fell by -2 to 109 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.
