Nat-Gas Prices Erase Early Gains on Warm US Weather

Rich Asplund Barchart Tue Oct 22, 2:16PM CDT
Natural Gas - Jack up drilling rigs off coast by Elliot Day via Pixabay

November Nymex natural gas (NGX24) on Tuesday closed down by -0.001 (-0.04%).

Nov nat-gas prices Tuesday gave up an early advance and posted modest losses.  Gas prices came under pressure Tuesday after updated US weather forecasts called for above-normal temperatures across most of the US, which will curb heating demand for nat-gas.  Forecaster Atmospheric G2 said Tuesday that weather forecasts show much warmer-than-normal temperatures over the eastern two-thirds of the US for October 27-31.

Lower-48 state dry gas production Tuesday was 101.2 bcf/day (-2.9% y/y), according to BNEF.  Lower-48 state gas demand Tuesday was 69.6 bcf/day (-1.1% y/y), according to BNEF.  LNG net flows to US LNG export terminals Tuesday were 11.8 bcf/day (-10.6% 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 Thursday that total US electricity output in the week ended October 12 rose +6.76% y/y to 73,640 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 12 rose +1.62% y/y to 4,158,968 GWh.

Last Thursday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended October 11 rose +76 bcf, right on expectations but below the 5-year average build for this time of year of +96 bcf.  As of October 11, nat-gas inventories were up +2.2% y/y and were +4.6% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 95% full as of October 20, above the 5-year seasonal average of 92% 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 October 18 fell by -2 rigs to 99 rigs, modestly above the 3-1/3 year low from September 6 of 94 rigs.  Active rigs have fallen 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.