Nat-Gas Prices Fall as Weekly EIA Inventories Climb More Than Expected
July Nymex natural gas (NGN25) on Thursday closed down by -0.039 (-1.05%).
July nat-gas prices on Thursday retreated from a 1-week high and closed lower after weekly EIA nat-gas inventories rose more than expected. The EIA reported Thursday that nat-gas inventories rose +122 bcf for the week ended May 30, above expectations of +113 bcf and well above the five-year average for this time of year of +98 bcf.
Nat-gas prices on Thursday initially rallied to a 1-week high before turning lower on forecasts for hotter weather across the US, which could boost nat-gas demand from electricity providers to run air-conditioning. Forecaster Vaisala said Thursday that forecasts shifted warmer in the Midwest and Northeast for June 10-14.
Lower-48 state dry gas production Thursday was 105.0 bcf/day (+3.1% y/y), according to BNEF. Lower-48 state gas demand Thursday was 70.4 bcf/day (-2.7% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 13.4 bcf/day (-6.4% 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 Wednesday that total US (lower-48) electricity output in the week ended May 31 fell -1.8% y/y to 76,711 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 31 rose +3.28% y/y to 4,248,428 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 30 rose +122 bcf, above expectations of +113 bcf and well above the 5-year average build for this time of year of +98 bcf. As of May 30, nat-gas inventories were down -10.4% y/y and +4.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 49% full as of June 2, versus the 5-year seasonal average of 60% 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 30 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.