Nat-Gas Prices Pressured by Above-Normal US Weather Forecasts

November Nymex natural gas (NGX24) on Friday closed down by -0.089 (-3.79%).

Nov nat-gas prices on Friday extended their two-week-long selloff and posted a 1-month nearest-futures low.  The outlook for above-normal US temperatures that will reduce heating demand for nat-gas is weighing on nat-gas prices.  The National Weather Service said Friday that temperatures across most of the lower 48 states will be well above normal for the rest of October.

Lower-48 state dry gas production Friday was 103.1 bcf/day (-0.3% y/y), according to BNEF.  Lower-48 state gas demand Friday was 70.1 bcf/day (+1.0% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 13.5 bcf/day (+7.1% 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 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.

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 13, above the 5-year seasonal average of 92% full for this time of year.

Baker Hughes reported 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).
 

More Natural Gas News from Barchart

• Nat-Gas Prices Slide on Forecasts for Warm US Autumn Temps
• Nat-Gas Prices Plunge on Above-Normal US Weather Forecasts
• Nat-Gas Prices Recover on Cold US Weather
• Nat-Gas Prices Tumble as US Weather Forecasts Warm

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.