Nat-Gas Prices Plunge on Cooler Weather Forecasts and Higher US Production
September Nymex natural gas (NGU25) on Tuesday closed down -0.124 (-4.29%).
Sep nat-gas prices on Tuesday plunged to a 9.25-month nearest-futures low and settled sharply lower on forecasts for cooler US weather and the outlook for higher US nat-gas production. Forecaster Atmospheric G2 said Tuesday that forecasts shifted cooler across the eastern two-thirds of the US and Southwest for August 24-29, which will curb nat-gas demand from electricity providers to power air conditioning.
Ramped-up US nat-gas production is another bearish factor for prices. Last Tuesday, the EIA raised its forecast for 2025 US nat-gas production by +0.5% to 106.44 bcf/day from July's estimate of 105.9 bcf/day. The EIA raised its forecast for 2026 US nat-gas production by +0.7% to 106.09 from July's 105.4 bcf/day forecast. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Tuesday was 108.4 bcf/day (+5.7% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 79.8 bcf/day (+2.7% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 14.8 bcf/day (-6.1% w/w), according to BNEF.
In a bearish factor, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended August 9 fell -1.9% y/y to 93,293 GWh (gigawatt hours), although US electricity output in the 52-week period ending August 9 rose +2.6% y/y to 4,257,529 GWh.
Last Thursday's weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended August 1 rose +56 bcf, slightly above the consensus of +54 bcf and well above the 5-year weekly average of +33 bcf. As of August 8, nat-gas inventories were down -2.4% y/y, but were +6.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of August 16, gas storage in Europe was 74% full, compared to the 5-year seasonal average of 81% 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 August 15 fell by -1 to 122 rigs, slipping a bit farther from the 2-year high of 124 rigs posted on August 1. In the past year, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024.
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.