September Nymex natural gas (NGU25) on Thursday closed up +0.061 (+2.00%).
Sep nat-gas prices on Thursday recovered from a 3.25-month low and settled higher after forecasts for warmer US weather sparked short-covering in nat-gas futures. Forecaster Atmospheric G2 said Thursday that forecasts shifted warmer for the western half of the US for August 5-9, with above-average temperatures seen expanding across the Southwest and Texas, which will boost nat-gas demand from electricity providers to power air-conditioning usage.
Nat-gas prices initially tumbled to a 3.25-month low Thursday after weekly nat-gas supplies rose more than expected. The EIA reported that nat-gas inventories rose +48 bcf in the week ended July 25, higher than expectations of +41 bcf and well-above the five-year average for this time of year at +24 bcf.
In addition, higher US nat-gas production is weighing on prices as recent US nat-gas output is up year-over-year. Moreover, 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 Thursday was 107.8 bcf/day (+2.4% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 80.5 bcf/day (-7.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 14.9 bcf/day (-2.4% 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 July 26 rose +8.1% y/y to 98,772 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 26 rose +2.7% y/y to 4,258,448 GWh.
Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended July 25 rose +48 bcf, above the consensus of +41 bcf and the 5-year average of +24 bcf for the week. As of July 25, nat-gas inventories were down -3.9% y/y, but were +6.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 29, gas storage in Europe was 68% full, compared to the 5-year seasonal average of 76% 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.
