Mondays NG wrap Up September Nymex natural gas (NGU23) on Monday closed +0.025 (+0.90%).
Nat-gas prices Monday posted moderate gains. Prices pushed higher on forecasts for hot temperatures to move in the central U.S. next week, which will boost nat-gas demand from electricity providers to power air conditioning. Gains in nat-gas were limited on forecasts for cooler temperatures in the West next week and near-normal temperatures in the East.
Lower-48 state dry gas production on Monday was 101.0 bcf/day (+4.3% y/y), according to BNEF. Lower-48 state gas demand Monday was 77.3 bcf/day, +18% y/y, according to BNEF. LNG net flows to U.S. LNG export terminals Monday were 12.5 bcf/day or -3.4% w/w.
Last Wednesday, nat-gas prices soared to a 5-3/4 month high after European nat-gas price surged more than +28% to a 2-month high when LNG workers in Australia voted to strike, which could tighten global nat-gas supplies. Inspired Plc predicts Asian LNG buyers "would likely bid up LNG imports" to replace Australian volumes if workers strike. Australia is the world's third-largest liquified natural gas (LNG) exporter.
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Nat-gas prices continue to be undercut by high inventories caused by weak heating demand during the abnormally mild winter. This past winter's warm temperatures caused nat-gas inventories to rise in Europe and the United States. Gas storage across Europe was 87% full as of August 6, well above the 5-year seasonal average of 73% full for this time of year. U.S. nat-gas inventories as of August 4 were +11.2% above their 5-year seasonal average.
A decrease in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported last Wednesday that total U.S. electricity output in the week ended August 5 fell -0.8% y/y to 95,336 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending August 5 fell -1.6% y/y to 4,061,687 GWh.
Last Thursday's weekly EIA report of +29 bcf for the week ended August 4 was bearish for nat-gas prices since it was above the estimate of +24 bcf. Also, as of August 4, nat-gas inventories were up +21.2% y/y and +11.2% above their 5-year seasonal average.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended August 11 fell by -5 to a 1-1/2 year low of 123 rigs. Active rigs rose to a 4-year high of 166 rigs in September 2022. Active rigs have more than doubled from the record low of 68 rigs posted in July 2020 (data since 1987).