June Nymex natural gas (NGM25) on Friday closed up by +0.081 (+2.49%).
June nat-gas prices on Friday recovered from an early slide and settled higher. Short-covering emerged in nat-gas futures Friday after weather forecasts turned warmer for most of the US, which could boost nat-gas demand from electricity providers to power increased air conditioning usage. NOAA forecasts on Friday shifted warmer for most of the US from May 28 to June 1.
Nat-gas prices Friday initially moved lower on negative carryover from Thursday when the EIA reported a larger-than-expected build of weekly inventories. Weekly EIA mat-gas inventories rose by +120 bcf for the week ended May 16, well above the five-year average for this time of year of +87 bcf.
Lower-48 state dry gas production Friday was 107.0 bcf/day (+4.7% y/y), according to BNEF. Lower-48 state gas demand Friday was 70.5 bcf/day (+2.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 14.3 bcf/day (+0.2% 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 May 17 rose +2.5% y/y to 75,855 GWh (gigawatt hours), and US electricity output in the 52-week period ending May 17 rose +3.67% y/y to 4,253,433 GWh.
Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 16 rose +120 bcf, slightly above expectations of +119 bcf and well above the 5-year average build for this time of year of +87 bcf. As of May 16, nat-gas inventories were down -12.7% y/y and +3.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 45% full as of May 20, versus the 5-year seasonal average of 56% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending May 23 fell -2 to 98 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).
