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June Nymex natural gas (NGM25) on Wednesday closed down by -0.155 (-4.25%).
June nat-gas prices on Wednesday tumbled to a 1-week low and settled sharply lower. Forecasts for mild US spring temperatures that will reduce demand for air-conditioning are weighing on nat-gas prices. Forecaster Vaisala said Wednesday that weather forecasts shifted cooler for May 19-23 in the US East and Midwest.
Also weighing on nat-gas prices are the expectations that above-normal spring temperatures will boost US nat-gas inventories. The consensus is that Thursday’s weekly EIA nat-gas inventories will climb by +111 bcf for the week ended May 9, above the five-year average for the week of +83 bcf.
Lower-48 state dry gas production Wednesday was 104.5 bcf/day (+3.9% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 65.1 bcf/day (-4.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 14.3 bcf/day (+4.1% 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 10 fell -2.8% y/y to 72,735 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 10 rose +3.6% y/y to 4,251,600 GWh.
Last Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 2 rose +104 bcf, above expectations of +101 bcf and well above the 5-year average build for this time of year of +79 bcf. As of May 2, nat-gas inventories were down -16.5% y/y and +1.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 43% full as of May 11, versus the 5-year seasonal average of 53% 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 9 was unchanged at 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).
