August Nymex natural gas (NGQ25) on Friday closed up +0.023 (+0.65%).
Aug nat-gas prices on Friday settled higher on forecasts for excessive heat next week in the US. Vaisala said forecasts remain above normal for the July 22-26 period across the US, with highs in the mid-90s expected in the middle of the country, which could boost nat-gas demand from electricity providers to meet increased air conditioning usage. Also, forecaster Atmospheric G2 said Friday that forecasts shifted hotter over the south-central and southwestern US for July 28-August 1.
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However, gains in nat-gas prices were limited due to abundant US nat-gas supplies and the outlook for higher US nat-gas production. As of July 11, nat-gas inventories were +6.2% above their 5-year seasonal average. Also, a weekly report from Baker Hughes showed the number of active US nat-gas drilling rigs rose to a 17-month high on Friday, which portends to higher nat-gas production in the near term.
Lower-48 state dry gas production on Friday was 108.3 bcf/day (+5.3% y/y), according to BNEF. Lower-48 state gas demand on Friday was 78 bcf/day (-0.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 15.5 bcf/day (-1.2% 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 12 rose +1.1% y/y to 98,133 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 12 rose +2.4% y/y to 4,248,982 GWh.
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 15, gas storage in Europe was 63% full, compared to the 5-year seasonal average of 72% full for this time of year.
Baker Hughes reported 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.
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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