August Nymex natural gas (NGQ25) on Monday closed up +0.152 (+4.59%).

Aug nat-gas prices on Monday rallied sharply and posted a 1-week high.  Hotter US weather forecasts that will boost nat-gas demand from electricity providers to power increased air-conditioning usage pushed prices sharply higher on Monday.  Forecaster Atmospheric G2 said Monday that forecasts shifted warmer across much of the southern and central US for July 19-23, and hotter for the eastern two-thirds of the country for July 24-28.

Lower-48 state dry gas production on Monday was 107.2 bcf/day (+3.0% y/y), according to BNEF.  Lower-48 state gas demand on Monday was 76.7 bcf/day (-4.8% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Monday were 15.8 bcf/day (+5.8% 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 last Wednesday that total US (lower-48) electricity output in the week ended July 5 rose +1.0% y/y to 93,747 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 5 rose +2.4% y/y to 4,247,938 GWh.

Last Thursday’s weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended July 4 rose +53 bcf, below the consensus of +61 bcf and right on the 5-year average for the week.  As of July 4, nat-gas inventories were down -6.0% y/y, but were +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of July 8, gas storage in Europe was 61% full, compared to the 5-year seasonal average of 71% 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 11 was unchanged at 108 rigs, slightly below the 15-month high of 114 rigs posted on June 6.  In the past nine months, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024.