August Nymex natural gas (NGQ25) on Wednesday closed down -0.175 (-5.38%).
Aug nat-gas prices added to this week’s sharp losses on Wednesday and dropped to a 2.75-month low due to forecasts for cooler US weather, which would curb nat-gas demand from electricity providers for air conditioning usage. Forecaster Atmospheric G2 said Wednesday that forecasts shifted generally cooler across the US for August 2-6.
Also, stronger US nat-gas output is weighing on prices with recent production up year-over-year. In addition, 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 18 rose by +9 to a 17-month high of 117 rigs.
Lower-48 state dry gas production on Wednesday was 108.8 bcf/day (+4.5% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 79.5 bcf/day (-4.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.0 bcf/day (+1.0% 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 19 rose +2.1% y/y to 99,373 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 19 rose +2.4% y/y to 4,251,059 GWh.
The consensus is that Thursday’s weekly EIA nat-gas inventories will increase by +27 bcf for the week ended July 18, just below the five-year average for the week at +30 bcf.
Last Thursday’s weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended July 11 rose +46 bcf, above the consensus of +45 bcf and the 5-year average of +41 bcf for the week. As of July 11, nat-gas inventories were down -4.9% y/y, but were +6.2% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 21, gas storage in Europe was 65% full, compared to the 5-year seasonal average of 74% 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 18 rose by +9 to a 17-month high of 117 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.
