Nat-Gas Prices Sink as Cooler US Temps Dampen Nat-Gas Demand
September Nymex natural gas (NGU25) on Friday closed down -0.128 (-4.53%).
Sep nat-gas prices sank to a 9.5-month nearest-futures low Friday and settled sharply lower on the prospects of cooler US temperatures reducing demand for nat-gas to power air conditioning. On Friday, Forecaster Atmospheric G2 said that forecasts shifted cooler in the eastern and southern US for August 27-31, and shifted cooler across the middle of the country for September 1-5.
Ramped-up US nat-gas production is another bearish factor for prices. Last Tuesday, the EIA raised its forecast for 2025 US nat-gas production by +0.5% to 106.44 bcf/day from July's estimate of 105.9 bcf/day. The EIA raised its forecast for 2026 US nat-gas production by +0.7% to 106.09 from July's 105.4 bcf/day forecast. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Friday was 108.4 bcf/day (+6.3% y/y), according to BNEF. Lower-48 state gas demand on Friday was 77.9 bcf/day (+9.8% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 15.7 bcf/day (+0.4% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended August 16 rose +7.1% y/y to 99,160 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 16 rose +2.7% y/y to 4,264,139 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 15 rose +13 bcf, below the consensus of +18 bcf and well below the 5-year weekly average of +35 bcf. As of August 15, nat-gas inventories were down -3.0% y/y, but were +5.8% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of August 19, gas storage in Europe was 74% full, compared to the 5-year seasonal average of 82% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending August 22 was unchanged at 122 rigs, just below the 2-year high of 124 rigs posted on August 1. In the past year, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024.
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.