August Nymex natural gas (NGQ25) on Friday closed sharply higher by +0.213 (+6.04%).
Aug nat-gas prices on Friday rallied sharply in anticipation of hotter US weather boosting nat-gas demand from electricity providers to power increased air-conditioning usage. Forecaster Atmospheric G2 said Friday that forecasts shifted warmer for most of the US for July 7-11, except for the southern tier and West Coast.
Nat-gas prices sank to a 1-month nearest-futures low Thursday on a larger-than-expected build in weekly EIA inventories. As of June 20, nat-gas inventories were +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. The easing of geopolitical risks also undercut nat-gas prices this week 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 Friday was 105.2 bcf/day (+1.7% y/y), according to BNEF. Lower-48 state gas demand on Friday was 74.3 bcf/day (+1.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 14.8 bcf/day (+7.4% 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.
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 23, gas storage in Europe was 57% full, compared to the 5-year seasonal average of 66% 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 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.
