Rich Asplund
2 min read
July Nymex natural gas (NGN25) on Wednesday closed up by +0.138 (+3.58%).
July nat-gas prices on Wednesday extended this week's rally and climbed to a 2-1/2 month nearest-futures high. The outlook for sweltering US temperatures, which will boost nat-gas demand from electricity providers to run air conditioning, is supporting prices. Forecaster Atmospheric G2 said on Wednesday that the outlook remains for a major heatwave over the eastern half of the US during the first half of next week.
Nat-gas prices remained higher Wednesday after weekly EIA inventories rose +95 bcf, below expectations of +97 bcf but above the five-year average for this time of year of +72 bcf.
Geopolitical risks from the Israel-Iran war also support nat-gas prices on concern that any attempt by Iran to close the Strait of Hormuz could disrupt LNG shipments through that Strait, which accounts for about 20% of global LNG trade.
Lower-48 state dry gas production Wednesday was 105.2 bcf/day (+2.4% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 73.4 bcf/day (-4.6% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 13.8 bcf/day (-2.7% 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 June 14 rose +0.8% y/y to 85,329 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 14 rose +2.9% y/y to 4,246,808 GWh.
Wednesday's weekly EIA report was mixed for nat-gas prices since nat-gas inventories for the week ended June 13 rose +95bcf, below expectations of +97 bcf but well above the 5-year average build for this time of year of +72 bcf. As of June 13, nat-gas inventories were down -8.0% y/y and +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 54% full as of June 16, versus the 5-year seasonal average of 64% 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 13 fell by -1 to 113, falling back from the previous week's 15-month high of 114 rigs. 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
