Forecasts for Warm US Temps Boost Nat-gas Prices

Rich Asplund Barchart Mon Sep 16, 2:41PM CDT
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October Nymex natural gas (NGV24) on Monday closed up by +0.068 (+2.95%).

Oct nat-gas prices Monday recovered from early losses and settled moderately higher.  Nat-gas prices rallied on forecasts for warm US temperatures that will boost nat-gas demand from electricity providers to run air conditioning.  NatGasWeather.com said Monday that warmer-than-normal temperatures are expected across most of the US from September 22-29.

Lower-48 state dry gas production Monday was 100 bcf/day (-0.7% y/y), according to BNEF.  Lower-48 state gas demand Monday was 71.8 bcf/day (+5.1% y/y), according to BNEF.  LNG net flows to US LNG export terminals Monday were 13 bcf/day (-2.0% 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 last 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.

Last 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 last 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.