Nat-gas Prices Relinquish Early Gains as Gulf Production Comes Back Online

Rich Asplund Barchart Fri Sep 13, 2:33PM CDT
Natural Gas - Natural gas close up burner by Freer Law via iStock

October Nymex natural gas (NGV24) on Friday closed down by -0.052 (-2.21%).

Oct nat-gas prices Friday fell back from a 2-month nearest-futures high and posted moderate losses.  Long liquidation emerged in nat-gas futures Friday on reports of US nat-gas production and deliveries coming back online along the Gulf Coast after tropical storm Francine dissipated.

Nat-gas prices Friday initially move higher on forecasts for warmer US weather that will boost nat-gas demand from electricity providers to run air conditioning.  Maxar Technologies said Friday that temperatures across most of the US will be above normal in the 11-15 day forecast.  

Lower-48 state dry gas production Friday was 99.4 bcf/day (-1.0% y/y), according to BNEF.  Lower-48 state gas demand Friday was 71.6 bcf/day (+0.1% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 11.9 bcf/day (-11.6% w/w), according to BNEF.

A decrease in US electricity output is negative for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total US electricity output in the week ended September 7 fell -8.05% y/y to 82,941 GWh (gigawatt hours), although US electricity output in the 52-week period ending September 7 rose +1.46% y/y to 4,141,562 GWh.

Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended September 6 rose +40 bcf, below expectations of +48 and well below the 5-year average build for this time of year of +67 bcf.  As of September 6, nat-gas inventories were up +5.7% y/y and were +9.6% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 93% full as of September 9, above the 5-year seasonal average of 87% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending September 13 rose by +3 rigs to 97 rigs, rebounding from the prior week's 3-1/3 year low of 94 rigs.  Active rigs have fallen back since posting a 5-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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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.