August Nymex natural gas (NGQ24) on Tuesday closed down by -0.043 (-1.74%).  

Aug nat-gas prices Tuesday moved lower for the sixth consecutive session and posted a 7-week low.  Nat-gas prices remain under pressure as US gas storage is +20.6% above the 5-year seasonal average, signaling robust supplies.  Also, weather forecasts have been trending cooler in the US, which will curb nat-gas demand from electricity providers to run air-conditioning.  Forecaster Atmospheric G2 said Tuesday that US weather forecasts have shifted cooler across much of the central and eastern parts of the US for July 7-11.

The outlook for hot summer temperatures in the US is a bullish factor for nat-gas prices.  The National Weather Service (NWS) said on June 11 that "the vast majority of the lower 48 US states could see above-average temperatures for the next three months, and for a good portion of states, a hotter-than-normal summer is the most likely scenario."

Lower-48 state dry gas production Tuesday was 101.1 bcf/day (-0.3% y/y), according to BNEF.  Lower-48 state gas demand Tuesday was 75.3 bcf/day (+5.8% y/y), according to BNEF.  LNG net flows to US LNG export terminals Tuesday were 12.2 bcf/day (+8.9% 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 Wednesday that total US electricity output in the week ended June 22 rose +12.6% y/y to 94,220 GWh (gigawatt hours), and US electricity output in the 52-week period ending June 22 rose +1.85% y/y to 4,137,658 GWh.

The consensus is that Wednesday's weekly EIA nat-gas inventories will climb by +29 bcf, well below the five-year average for this time of year of +69 bcf.  The weekly EIA report will be released a day early due to Thursday's July 4 holiday.  

Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended June 21 rose by +52 bcf, below expectations of +54 bcf and below the 5-year average build for this time of year of +85 bcf.  However, as of June 21, nat-gas inventories were up +10.4% y/y and were +20.6% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 77% full as of June 30, above the 5-year seasonal average of 67% 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 June 28 fell -1 rig to a 2-3/4 year low of 97 rigs.  Active rigs have fallen since climbing to a 4-3/4 year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
 



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