Sep Nymex natural gas (NGU24) on Monday closed up by +0.112 (+5.28%).

Sep nat-gas prices Monday recovered from a 1-week low and closed sharply higher.  Short covering emerged in nat-gas futures Monday, and prices soared after weather forecasts called for hotter US temperatures that would boost nat-gas demand from electricity providers to run air conditioning.  Forecaster Atmospheric G2 said Monday that forecasts shifted hotter for the eastern two-thirds of the US for August 24-18.  

Earlier this month, nat-gas prices tumbled to a 3-3/4 month nearest futures low on forecasts for cooler US weather amid elevated nat-gas stockpiles.  Current US nat-gas supplies are abundant, with nat-gas inventories +13% above their 5-year seasonal average as of August 9.

Lower-48 state dry gas production Monday was 101.5 bcf/day (-0.7% y/y), according to BNEF.  Lower-48 state gas demand Monday was 77.2 bcf/day (+9.9% y/y), according to BNEF.  LNG net flows to US LNG export terminals Monday were 12.8 bcf/day (+0.5% 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 August 10 rose +2.55% y/y to 95,115 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 10 rose +2.16% y/y to 4,150,379 GWh.

Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 9 unexpectedly fell -6 bcf, below expectations of +1 bcf and well below the 5-year average build for this time of year of +43 bcf.  Thursday's unexpected draw was the first decline in weekly nat-gas storage in 8 years.  As of August 9, nat-gas inventories were up +6.5% y/y and were +13.0% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 88% full as of August 11, above the 5-year seasonal average of 79% 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 16 rose +1 rig to 98 rigs, just above the 3-year low of 97 rigs from August 9 and June 28.  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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