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).
