November Nymex natural gas (NGX26) on Tuesday closed down -0.095 (-3.06%).
Nat-gas prices settled sharply lower on Tuesday for a second day after gas production returned to near normal after repairs were made to a ruptured gas pipeline in West Virginia, easing supply fears. TC Energy on Sunday notified customers that it lifted the force majeure on the Mountaineer Xpress, part of the Columbia Gas Transmission system, after repairs to the pipeline.
Forecasts for seasonal US weather on Tuesday that will limit nat-gas demand for heating or air conditioning also weighed on prices. On Tuesday, the Commodity Weather Group said temperature forecasts shifted toward more normal seasonal weather across the eastern and southern US from October 4-13.
US (lower-48) dry gas production on Tuesday was 110.8 bcf/day (+1.0% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 70.6 bcf/day (-1.6% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 18.8 bcf/day (+1.1% w/w), according to BNEF.
A bearish medium-term factor for nat-gas prices is the market's expectation that a “Super El Niño” will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand for nat-gas.
As a positive factor for gas prices, the Edison Electric Institute reported September 16 that US (lower-48) electricity output in the week ended September 12 rose +16.1% y/y to 94,427 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending September 12 rose +3.3% y/y to 4,405,549 GWh.
As a bearish factor, the US Energy Information Administration (EIA) on August 11 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. Last Monday, the EIA raised its 2027 US dry natural gas production estimate to 116.0 bcf/day from 115.3 bcf/day projected in July.
Last Thursday's weekly EIA report was mixed for nat-gas prices, as it showed a +53 bcf increase in US nat-gas inventories for the week ended September 18, above expectations of +51 but below the 5-year weekly average of +76 bcf. As of September 18, nat-gas inventories were down -4.5% y/y and +2.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 27, gas storage in Europe was 71% full, compared to the 5-year seasonal average of 87% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ended September 25 rose by +1 to a new 3-year high of 135 rigs.
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.