September Nymex natural gas (NGU26) on Friday closed up +0.006 (+0.22%). Nat-gas prices closed higher on Friday as forecasts indicated warm US weather in the final weeks of August, which would boost nat-gas demand from utilities to meet increased air-conditioning demand. Commodity Weather Group is forecasting above-normal temperatures across the South in particular through the end of August.
Vaisala is forecasting above-normal temperatures for the West for Aug 22-26. Is it Time to Begin Accumulating Natural Gas? Don't Rule Out a September Rate Hike.
Despite Cooler Inflation Data, This Fed Dissenter Says 'We Need To Act Now' on Interest Rates. Crude Prices Higher on Continued Hormuz Tensions Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. As a bearish factor, the US Energy Information Administration (EIA) on Tuesday projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average.
US nat-gas inventories are currently +6.7% above their 5-year seasonal average, a sign of robust supplies. Nat-gas prices have some negative carryover from last Tuesday when Energy Transfer announced that the Hugh Brinson pipeline will be able to operate at its full transportation capacity of 1.5 bcf/day by September 1, allowing more gas supplies to flow from the Permian Basin to the US benchmark Henry Hub in Erath, Louisiana, boosting US domestic supplies. A bearish medium-term factor for nat-gas prices is speculation that a powerful El Niño weather system will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing nat-gas heating demand.
US (lower-48) dry gas production on Friday was 114.4 bcf/day (+4.0% y/y), according to BNEF. Lower-48 state gas demand on Friday was 81.6 bcf/day (+1.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 18.1 bcf/day (-0.9% w/w), according to BNEF.
As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended August 8 rose +7.0% y/y to 99,864 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending August 1 rose +2.3% y/y to 4,357,109 GWh. Thursday's bearish weekly EIA report showed a +36 bcf increase in US nat-gas inventories for the week ended August 7, larger than market expectations of +31 bcf and the 5-year weekly average of +33 bcf.
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