September Nymex natural gas (NGU25) on Wednesday closed down -0.097 (-3.09%).

Sep nat-gas prices retreated on Wednesday due to a mixed weather forecast and the outlook for weekly nat-gas inventories to increase more than the seasonal average.   Forecaster Vaisala said Wednesday that below-normal temperatures are forecast along the East Coast during the August 4-8 period, which will curb nat-gas demand from electricity providers to power air-conditioning usage.  However, forecasts shifted warmer for the West and East during the August 9-13 period.

Also weighing on nat-gas prices is the outlook for weekly supplies to build more than the seasonal average.  The consensus is that Thursday's weekly EIA nat-gas inventories will increase by +36 bcf for the week ended July 25, above the five-year average for this time of year of +24 bcf.

Nat-gas prices had tumbled to a 3-month low Monday due to more temperate US weather forecasts and higher US nat-gas production, with recent US nat-gas output up year-over-year.  In addition, expectations for even higher US nat-gas production are also weighing on nat-gas prices after last Friday's weekly report from Baker Hughes showed that the number of active US nat-gas drilling rigs in the week ending July 25 rose by +5 to a nearly 2-year high of 122 rigs.

Lower-48 state dry gas production on Wednesday was 108.4 bcf/day (+3.4% y/y), according to BNEF.  Lower-48 state gas demand on Wednesday was 84.5 bcf/day (+1.9% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Wednesday were 14.9 bcf/day (-0.8% w/w), according to BNEF.

An increase in US electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended July 26 rose +8.1% y/y to 98,772 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 26 rose +2.7% y/y to 4,258,448 GWh.

Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 18 rose +23 bcf, below the consensus of +27 bcf and the 5-year average of +30 bcf for the week.  As of July 18, nat-gas inventories were down -4.8% y/y, but were +5.9% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of July 22, gas storage in Europe was 66% full, compared to the 5-year seasonal average of 74% 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 July 25 rose by +5 to a nearly 2-year high of 122 rigs.  In the past ten months, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024.