July Nymex natural gas (NGN25) on Thursday closed down by -0.035 (-0.98%).
July nat-gas prices on Thursday extended Wednesday’s plunge and fell to a 1-1/2 week low on forecast for cooler US weather and a build in nat-gas inventories. The Commodity Weather Group said Thursday that forecasts have turned cooler for the central US for June 3-7, which could curb nat-gas demand from electricity providers to run air conditioning.
Abundant US nat-gas supplies also weighed on prices after Thursday’s weekly EIA nat-gas inventories rose by +101 bcf for the week ended May 23, right on expectations but above the five-year average for this time of year of +98 bcf.
Lower-48 state dry gas production Thursday was 106.2 bcf/day (+3.7% y/y), according to BNEF. Lower-48 state gas demand Thursday was 69.0 bcf/day (+4.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 14.4 bcf/day (+2.4% 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 Thursday that total US (lower-48) electricity output in the week ended May 24 fell -4.4% y/y to 77,837 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 24 rose +3.25% y/y to 4,249,859 GWh.
Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 23 rose +101 bcf, right on expectations, but above the 5-year average build for this time of year of +98 bcf. As of May 23, nat-gas inventories were down -11.7% y/y and +3.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 47% full as of May 26, versus the 5-year seasonal average of 58% 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 23 fell -2 to 98 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).
