July Nymex natural gas (NGN25) on Wednesday closed down by -0.026 (-0.74%).

July nat-gas prices on Wednesday added to this week's losses and fell to a 1-1/2 week low.   Prices moved lower on ample nat-gas supplies and expectations for inventories to build.  As of May 30, nat-gas inventories were +4.7% above their 5-year seasonal average, signaling adequate nat-gas supplies.  Also, the consensus is for Thursday's weekly EIA nat-gas inventories to climb by +107 bcf, a larger build than the five-year average for this time of year of +87 bcf.

Losses in nat-gas prices were limited Wednesday by forecasts for hotter temperatures to move across the US.  Forecaster Atmospheric G2 stated on Wednesday that above-normal temperatures are expected to move from the West into the central and eastern US from June 16 to 20, which would potentially boost natural gas demand from electricity providers to run air conditioning.  

Lower-48 state dry gas production Wednesday was 104.5  bcf/day (+3.4% y/y), according to BNEF.  Lower-48 state gas demand Wednesday was 69.2 bcf/day (unchanged y/y), according to BNEF.  LNG net flows to US LNG export terminals Wednesday were 13.8 bcf/day (+1.8% 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 June 7 fell -2.7% y/y to 82,114 GWh (gigawatt hours), although US electricity output in the 52-week period ending June 7 rose +3.0% y/y to 4,246,137 GWh.

Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 30 rose +122 bcf, above expectations of +113 bcf and well above the 5-year average build for this time of year of +98 bcf.  As of May 30, nat-gas inventories were down -10.4% y/y and +4.7% above their 5-year seasonal average, signaling adequate nat-gas supplies.  In Europe, gas storage was 51% full as of June 8, versus the 5-year seasonal average of 62% 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 June 6 rose +5 to a 15-month high of 114 rigs, moderately 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).