July Nymex natural gas (NGN25) on Monday closed down by -0.149 (-3.94%).

July nat-gas prices on Monday tumbled to a 1-week low and settled sharply lower.   Nat-gas prices sold off Monday due to abundant US nat-gas supplies and the outlook for higher US nat-gas production.  As of May 30, nat-gas inventories were +4.7% above their 5-year seasonal average, signaling adequate nat-gas supplies.  Also, last Friday’s weekly report from Baker Hughes showed active US nat-gas rigs rose to a 15-month high, signaling higher production in the near term.

Nat-gas prices on Monday also moved lower on forecasts for cooler US temperatures that will potentially curb nat-gas demand from electricity providers to run air-conditioning.  The Commodity Weather Group announced on Monday that forecasts have shifted cooler for the East Coast for June 14-18.

Lower-48 state dry gas production Monday was 105.6  bcf/day (+3.4% y/y), according to BNEF.  Lower-48 state gas demand Monday was 69.9 bcf/day (+4.7% y/y), according to BNEF.  LNG net flows to US LNG export terminals Monday were 13.6 bcf/day (+2.7% 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 last 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.

Last 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 June 6 rose +5 to a 15-month high of 114 rigs, moderately 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).

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