Sep Nymex natural gas (NGU24) on Friday closed down -0.021 (-1.01%), posting the fourth consecutive decline.

Sep nat-gas prices on Friday extended the sharp 4-session sell-off and posted a new contract low.  Meanwhile, Aug nat-gas prices fell to a new 2-3/4 month low on the nearest futures chart and are hovering just moderately above the 4-year nearest-futures low posted earlier this year in March.

Nat-gas prices were undercut Friday by continued inventory concerns after Thursday's bearish weekly EIA report showed that inventories rose by +22 bcf, more than expectations of +11 bcf.  Nat-gas inventories are plentiful at +16.4% above their 5-year seasonal average.

Weather remains bullish for nat-gas prices as hot temperatures boost demand for air-conditioning and electricity.  NatGasWeather sees hot temperatures for most of the US during Aug 2-9, especially from Texas to California.

Lower-48 state dry gas production Friday was 103.9 bcf/day (+2.9% y/y), according to BNEF.  Lower-48 state gas demand Friday was 76.0 bcf/day (-5.5% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 12.9 bcf/day (+13.9% 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 on July 24 that total US electricity output in the week ended July 20 rose +1.93% y/y to 97,296 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 20 rose +2.27% y/y to 4,150,953 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended July 19 rose by +22 bcf, above expectations of +11 bcf but below the 5-year average build for this time of year of +31 bcf.  As of July 19, nat-gas inventories were up +8.2% y/y and were +16.4% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 80% full as of July 8, above the 5-year seasonal average of 70% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending July 26 fell -2 rigs to 101 rigs, modestly above the 2-3/4 year low of 97 rigs posted June 28.  Active rigs have fallen back since posting a 4-3/4 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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