NYMEX Nat Gas Aug. futures settle at $3.4660/MMBTU

NYMEX Nat Gas Aug. futures settle at $3.4660/MMBTU

In a move that defied expectations, the August Nymex natural gas futures closed lower on Friday, despite forecasts for warmer US weather and a bullish EIA report. The contract settled at $3.4660/MMBTU, marking a decline of -0.023 (-0.69%) from the previous day's close [1].

The price drop occurred despite favorable conditions for natural gas demand. The Atmospheric G2 shifted forecasts to warmer temperatures for the Midwest and eastern US for July 16-20, but cooler for the West. Looking ahead to July 21-25, forecasts indicated slightly warmer conditions in the eastern US and cooler temperatures in the West [1].

Data from BNEF showed that lower-48 state dry gas production on Friday was 106.6 bcf/day (+3.5% y/y), while gas demand was 76.8 bcf/day (-7.1% y/y). Estimated LNG net flows to US LNG export terminals on Friday were 15.8 bcf/day (+5.0% w/w) [1].

An increase in US electricity output was noted as a positive factor for natural gas demand. The Edison Electric Institute reported that total US (lower-48) electricity output in the week ended July 5 rose by +1.0% y/y to 93,747 GWh, and over the 52-week period ending July 5, it increased by +2.4% y/y to 4,247,938 GWh [1].

Thursday's EIA report was bullish for natural gas prices, as inventories for the week ended July 4 rose by +53 bcf, below the consensus of +61 bcf and right on the 5-year average for the week. As of July 4, natural gas inventories were down -6.0% y/y, but were +6.1% above their 5-year seasonal average, signaling adequate supplies. As of July 8, gas storage in Europe was 61% full, compared to the 5-year seasonal average of 71% full for this time of year [1].

Baker Hughes reported that the number of active US natural gas drilling rigs in the week ending July 11 was unchanged at 108 rigs, slightly below the 15-month high of 114 rigs posted on June 6. Over the past nine months, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024 [1].

References:
[1] https://www.barchart.com/story/news/33356804/nat-gas-prices-close-lower-despite-warmer-weather-forecast