June Nymex natural gas (NGM25) on Monday closed down by -0.080 (-2.20%).

June nat-gas prices on Monday fell from a 3-week high and posted moderate losses.  Nat-gas prices erased an early advance Monday after updated weather forecasts called for mild temperatures across most of the US, reducing demand for nat gas for running heat or air conditioning.

Last month, nat-has prices tumbled to a 5-1/2 month nearest-futures low as the warm US spring weather dampened heating demand for nat-gas and allowed supplies to rebuild.  NatGasWeather said last Wednesday that near-normal weather across the US through May 14 will keep demand for nat-gas light, allowing inventories to climb even more.  

In March, nat-gas rallied to a 2-year high on signs that US nat-gas storage levels could remain tight ahead of the summer air-conditioning season.  BloombergNEF projects that US gas storage will be 10% below the five-year average this summer.

Lower-48 state dry gas production Monday was 106.0  bcf/day (+5.3% y/y), according to BNEF.  Lower-48 state gas demand Monday was 63.2 bcf/day (-3.8% y/y), according to BNEF.  LNG net flows to US LNG export terminals Monday were 14.4 bcf/day (-8.0% 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 last Wednesday that total US (lower-48) electricity output in the week ended April 26 rose +5.2% y/y to 73,210 GWh (gigawatt hours), and US electricity output in the 52-week period ending April 26 rose +3.8% y/y to 4,252,848 GWh.

Last Thursday’s weekly EIA report was mixed for nat-gas prices since nat-gas inventories for the week ended April 25 rose +107 bcf, below expectations of +109 bcf but well above the 5-year average build for this time of year of +58 bcf.  As of April 25, nat-gas inventories were down -17.8% y/y and +0.2% above their 5-year seasonal average, signaling adequate nat-gas supplies.  In Europe, gas storage was 39% full as of April 29, versus the 5-year seasonal average of 49% 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 May 2 rose +2 to 101 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).

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