August Nymex natural gas (NGQ25) on Wednesday closed up +0.028 (+0.79%), the third consecutive daily rise.
Aug nat-gas prices on Wednesday extended the week-long rally and posted a new 2-week high. The main bullish factor was warmer US weather forecasts, which would boost nat-gas demand from electricity providers to meet increased air conditioning usage. Atmospheric G2 said that forecasts shifted hotter in the eastern two-thirds of the US for July 21-25. The rest of the country also remains hot.
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The consensus is for Thursday's weekly EIA report to show a +45 bcf increase, which would be above the 5-year average for the week of +41 bp.
Lower-48 state dry gas production on Wednesday was 106.6 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 79.6 bcf/day (-5.9% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.1 bcf/day (+0.3% 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 last Wednesday that total US (lower-48) electricity output in the week ended July 5 rose +1.0% y/y to 93,747 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 5 rose +2.4% y/y to 4,247,938 GWh.
Last Thursday’s weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 4 rose +53 bcf, below the consensus of +61 bcf and right on the 5-year average for the week. As of July 4, nat-gas inventories were down -6.0% y/y, but were +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 8, gas storage in Europe was 61% full, compared to the 5-year seasonal average of 71% 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 11 was unchanged at 108 rigs, slightly below the 15-month high of 114 rigs posted on June 6. In the past nine 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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