Nat-Gas Prices Fall as Weekly EIA Inventories Climb

Rich Asplund Barchart Thu May 15, 2:17PM CDT
Natural gas burnoff refinery by Leonid Eremeychuk via iStock

June Nymex natural gas (NGM25) on Thursday closed down by -0.130 (-2.72%).

June nat-gas prices on Thursday sank to a 2-week low and settled sharply lower on a greater-than-average build in weekly inventories.   The EIA reported Thursday that nat-gas inventories rose by +110 bcf for the week ended May 9, well above the five-year average for the week of +83 bcf.

On Thursday, losses in nat-gas prices were contained on forecasts for warmer US temperatures that will boost power demand for air-conditioning.  The Commodity Weather Group on Thursday said that weather forecasts shifted warmer for the Midwest and eastern half of the US on May 25-29 in the US East and Midwest.  

Lower-48 state dry gas production Thursday was 104.6  bcf/day (+4.1% y/y), according to BNEF.  Lower-48 state gas demand Thursday was 64.8 bcf/day (-5.8% y/y), according to BNEF.  LNG net flows to US LNG export terminals Thursday were 14.6 bcf/day (-2.2% w/w), according to BNEF.

A decline in US electricity output is negative for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended May 10 fell -2.8% y/y to 72,735 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 10 rose +3.6% y/y to 4,251,600 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 9 rose +110 bcf, right on expectations but well above the 5-year average build for this time of year of +83 bcf.  As of May 9, nat-gas inventories were down -14.6% y/y and +2.6% above their 5-year seasonal average, signaling adequate nat-gas supplies.  In Europe, gas storage was 43% full as of May 11, versus the 5-year seasonal average of 53% 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 May 9 was unchanged at 101 rigs, modestly above the 4-year low of 94 rigs posted on September 6, 2024.  Active rigs have fallen since posting a 5-1/2 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).
 


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.