June Nymex natural gas (NGM25) on Wednesday closed down by -0.060 (-1.77%).
June nat-gas prices settled moderately lower on Wednesday, based on the expectations of higher US nat-gas supplies. Thursday’s weekly EIA nat-gas inventories are expected to climb +109 bcf, well above the five-year average for this time of year of +58 bcf, as warm spring temperatures allow US supplies to build. Also, NatGasWeather said Wednesday that near-normal weather across the US through May 14 will keep demand for nat-gas light, allowing inventories to climb even more.
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Last Thursday, nat-has prices tumbled to a 5-month nearest-futures low as the warm US spring weather has dampened heating demand for nat-gas and allowed supplies to rebuild. Last Thursday's weekly EIA report showed nat-gas inventories rose +88 bcf for the week ended April 18, higher than expectations of +75 bcf and well above the five-year average for this time of year of +58 bcf.
Last month, nat-gas rallied to a 2-year high on signs that US nat-gas storage levels could remain tight ahead of the summer air-conditioning season. BloombergNEF projects that US gas storage will be 10% below the five-year average this summer.
Lower-48 state dry gas production Wednesday was 105.7 bcf/day (+5.7 y/y), according to BNEF. Lower-48 state gas demand Wednesday was 67.8 bcf/day (-1.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 15.8 bcf/day (+4.4% 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 April 26 rose +5.2% y/y to 73,210 GWh (gigawatt hours), and US electricity output in the 52-week period ending April 26 rose +3.8% y/y to 4,252,848 GWh.
In a bullish longer-term factor for nat-gas prices, President Trump lifted the Biden administration's pause on approving gas export projects in January, thus moving into active consideration a backlog of about a dozen LNG export projects. Increased US capacity for exporting LNG would boost demand for US nat-gas and support nat-gas prices.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended April 18 rose +88 bcf, above expectations of +75 bcf and well above the 5-year average build for this time of year of +58 bcf. As of April 18, nat-gas inventories were down -20.2% y/y and -2.3% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 39% full as of April 27, versus the 5-year seasonal average of 49% 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 April 25 rose +1 to 99 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).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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