Nat-Gas Prices Recover Early Losses on the Outlook for Warmer US Temps

Rich Asplund Barchart Thu Sep 19, 2:19PM CDT
Natural Gas - Natural gas burnoff refinery by Leonid Eremeychuk via iStock

October Nymex natural gas (NGV24) on Thursday closed up by +0.064 (+2.80%).

Oct nat-gas prices Thursday recovered from a 1-week low and closed moderately higher on forecasts for warmer US temperatures that will boost nat-gas demand from electricity providers to run air conditioning.  Short-covering emerged Thursday in nat-gas futures after NatGasWeather said warmer-than-normal temperatures are expected across most of the US from September 26-October 3.

Nat-gas prices Thursday initially fell to a 1-week low after weekly EIA inventories rose more than expected.  The EIA reported that nat-gas inventories rose +58 bcf for the week of September 13, above expectations of +56 bcf.

Lower-48 state dry gas production Thursday was 100 bcf/day (-1.3% y/y), according to BNEF.  Lower-48 state gas demand Thursday was 72.5 bcf/day (+11.7% y/y), according to BNEF.  LNG net flows to US LNG export terminals Thursday were 13 bcf/day (+3.8% 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 electricity output in the week ended September 14 rose +0.51% y/y to 80,674 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 14 rose +1.42% y/y to 4,141,969 GWh.

Thursday's weekly EIA report was mildly bearish for nat-gas prices since nat-gas inventories for the week ended September 13 rose +58 bcf, above expectations of +56 but well below the 5-year average build for this time of year of +80 bcf.  As of September 13, nat-gas inventories were up +5.4% y/y and were +8.6% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 93% full as of September 15, above the 5-year seasonal average of 88% 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 September 13 rose by +3 rigs to 97 rigs, rebounding from the prior week's 3-1/3 year low of 94 rigs.  Active rigs have fallen back since posting a 5-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).
 



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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.