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July Nymex natural gas (NGN25) on Wednesday closed down by -0.006 (-0.16%).
July nat-gas prices on Wednesday posted modest losses as temperature forecasts moderated across the central and eastern US, which could curb nat-gas demand from electricity providers to run air-conditioning. Forecaster Atmospheric G2 stated on Wednesday that forecasts shifted cooler across the southern half of the US, with a large portion of the central and eastern US expected to be cooler than normal for June 9-13.
Nat-gas prices were also under pressure Wednesday on expectations for a larger-than-seasonal build in nat-gas supplies. The consensus is that Thursday’s weekly EIA nat-gas inventories will climb by +110 bcf for the week ended May 30, above the five-year average of +98 bcf for this time of year.
Lower-48 state dry gas production Wednesday was 103.9 bcf/day (+2.2% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 69.2 bcf/day (-5.6% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 13.3 bcf/day (-4.9% 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 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 23 rose +101 bcf, right on expectations, but above the 5-year average build for this time of year of +98 bcf. As of May 23, nat-gas inventories were down -11.7% y/y and +3.9% 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 May 30 rose +1 to 99 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).
