September Nymex natural gas (NGU25) on Monday closed down -0.151 (-4.90%).
Sep nat-gas prices on Monday tumbled to a 3.5-month low and settled sharply lower. Ramped-up US nat gas production is undercutting prices as recent US nat-gas output is up year-over-year. Also, expectations for even higher US nat-gas production are 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 August 1 rose by +2 rigs to a 2-year high of 124 rigs.
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The outlook for cooler US temperatures that will reduce nat-gas demand from electricity providers for air conditioning usage is also weighing on nat-gas prices. Forecaster Atmospheric G2 said Monday that forecasts shifted colder for the central and eastern US for August 9-13.
Lower-48 state dry gas production on Monday was 108.1 bcf/day (+3.5% y/y), according to BNEF. Lower-48 state gas demand on Monday was 74.2 bcf/day (-8.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 15.3 bcf/day (+6.8% 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 26 rose +8.1% y/y to 98,772 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 26 rose +2.7% y/y to 4,258,448 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended July 25 rose +48 bcf, above the consensus of +41 bcf and the 5-year average of +24 bcf for the week. As of July 25, nat-gas inventories were down -3.9% y/y, but were +6.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of July 30, gas storage in Europe was 68% full, compared to the 5-year seasonal average of 76% 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 August 1 rose by +2 to a 2-year high of 124 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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