June Nymex natural gas (NGM25) on Tuesday closed up by +0.001 (+0.03%).
June nat-gas prices on Tuesday settled little changed. Nat-gas prices had some negative carryover from Monday when prices fell on the outlook for near-normal US temperatures to reduce electricity demand for air conditioning. On Monday, forecaster Atmospheric G2 said warm temperatures initially forecast for the west and north-central US for May 17-21 have shifted cooler, signaling expected air-conditioning demand could be less than previously thought.
However, nat-gas recovered their losses Tuesday as short covering emerged on forecasts for temperatures in the Southeast and Texas to remain above normal for May 18-22, a positive factor for air-conditioning demand.
Lower-48 state dry gas production Tuesday was 104.6 bcf/day (+3.3% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 65.0 bcf/day (-1.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 14.4 bcf/day (+17.6% 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 May 3 rose +1.2% y/y to 74,373 GWh (gigawatt hours), and US electricity output in the 52-week period ending May 3 rose +3.7% y/y to 4,253,707 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).
