Rich Asplund
2 min read
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July Nymex natural gas (NGN25) on Thursday closed sharply lower by -0.131 (-3.70%).
July nat-gas prices on Thursday extended this week's slide to a 6-month low. Nat-gas prices fell on Thursday's weekly EIA report, which showed a +96 bcf increase in the week ended June 20, which was a larger build than expectations of +88 bcf and the 5-year average increase for the week of +79 bcf. In addition, the Commodity Weather Group is forecasting a cool-down in the eastern half of the US for the later period of June 20-July 4 behind a cold front, which should curb nat-gas demand from electricity providers to run air conditioning.
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Nat-Gas Prices Fall to 6-month Low on Bearish EIA Report and Cooler Temps
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An easing of geopolitical risks is also bearish for nat-gas prices due to the Israel-Iran ceasefire. The ceasefire reduces the likelihood that Iran will close the Strait of Hormuz and disrupt LNG shipments through that Strait, which accounts for approximately 20% of global LNG trade.
Lower-48 state dry gas production on Thursday was 105.6 bcf/day (+2.7% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 77.1 bcf/day (-1.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 14.1 bcf/day (+4.0% 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 June 21 fell -3.1% y/y to 91,334 GWh (gigawatt hours), although US electricity output in the 52-week period ending June 21 rose +2.6% y/y to 4,243,923 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended June 20 rose +96 bcf, above the consensus of +88 bcf and the 5-year average for the week of +79 bcf. As of June 20, nat-gas inventories were down -6.6% y/y, but were +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of June 23, gas storage in Europe was 57% full, compared to the 5-year seasonal average of 66% 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 June 20 fell by -2 to 111 rigs, slightly below the 15-month high of 114 rigs from June 6. In the past nine months, gas rigs have risen from the 4-year low of 94 rigs posted 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. This article was originally published on Barchart.com
