June Nymex natural gas (NGM25) on Monday closed down by -0.221 (-6.63%).
June nat-gas prices on Monday extended their week-long slide to a 3-week low and settled sharply lower. Ample supplies and forecasts for cool US spring temperatures to continue are weighing on nat-gas prices. EIA nat-gas inventories as of May 9 are +2.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. Also, the Commodity Weather Group said that on Monday, forecasts shifted cooler for the southern US for May 29-June 2, reducing electricity demand to power air conditioning.
Lower-48 state dry gas production Monday was 106.3 bcf/day (+5.5% y/y), according to BNEF. Lower-48 state gas demand Monday was 65.5 bcf/day (+1.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 15.2 bcf/day (+1.2% 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 last Wednesday that total US (lower-48) electricity output in the week ended May 10 fell -2.8% y/y to 72,735 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 10 rose +3.6% y/y to 4,251,600 GWh.
Last Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 9 rose +110 bcf, right on expectations but well above the 5-year average build for this time of year of +83 bcf. As of May 9, nat-gas inventories were down -14.6% y/y and +2.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 44% full as of May 14, versus the 5-year seasonal average of 54% 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 May 16 fell -1 to 100 rigs, modestly above the 4-year low of 94 rigs posted on September 6, 2024. Active rigs have fallen since posting a 5-1/2 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
