September Nymex natural gas (NGU25) on Wednesday closed up +0.150 (+5.52%).
Sep nat-gas prices on Wednesday rallied sharply to a 1-week high on anticipation that Thursday’s weekly storage report will show a lower-than-normal build in nat-gas inventories. The consensus is that EIA nat-gas inventories rose +27 bcf for the week ended August 22, below the five-year average for this time of year of +38 bcf. Thin trading conditions exacerbated gains in nat-gas prices as Wednesday was the last trading day for the September nat-gas futures contract.
Natural gas prices have been under pressure over the past 2.5 months, dropping to a 9.5-month low in nearest-futures prices on Monday, as forecasts for cooler late-summer weather emerged. Forecaster Vaisala said it expects lower-than-normal temperatures to blanket the US from North Carolina to Northern California from September 4-8, which will reduce demand for natural gas to run air conditioning.
Ramped-up US nat-gas production is another bearish factor for prices. On August 12, 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 Wednesday was 107.7 bcf/day (+4.5% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 72.4 bcf/day (-15.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.5 bcf/day (+11.7% 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 23 rose +7.7% y/y to 95,130 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 23 rose +3.1% y/y to 4,270,960 GWh.
Last 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 24, gas storage in Europe was 76% full, compared to the 5-year seasonal average of 84% full for this time of year.
