June Nymex natural gas (NGM25) on Thursday closed down by -0.029 (-0.80%).

June nat-gas prices on Thursday gave up an early advance and posted moderate losses after weekly nat-gas inventories rose more than expected.  The EIA reported Thursday that nat-gas inventories for the week ended May 2 rose +104 bcf, above expectations of +101 bcf.  

Nat-gas prices Thursday initially moved higher on forecasts for above-average US temperatures, which could boost nat-gas demand from electricity providers to power increased air-conditioning usage.   NatGasWeather.com said Thursday that forecasts shifted hotter for the southern and southeastern regions of the US for May 14-19, with highs in the 90s.

Last month, nat-has prices tumbled to a 5-1/2 month nearest-futures low as the warm US spring weather dampened heating demand for nat-gas and allowed supplies to rebuild.  NatGasWeather said last Wednesday that near-normal weather across the US through May 14 will keep demand for nat-gas light, allowing inventories to climb even more.  

In March, nat-gas rallied to a 2-year high on signs that US nat-gas storage levels could remain tight ahead of the summer air-conditioning season.  BloombergNEF projects that US gas storage will be 10% below the five-year average this summer.

Lower-48 state dry gas production Thursday was 104.6  bcf/day (+5.1% y/y), according to BNEF.  Lower-48 state gas demand Thursday was 66.2 bcf/day (-7.4% y/y), according to BNEF.  LNG net flows to US LNG export terminals Thursday were 14.7 bcf/day (-2.9% 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 May 3 rose +1.2% y/y to 74,373 GWh (gigawatt hours), and US electricity output in the 52-week period ending May 3 rose +3.7% y/y to 4,253,707 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 2 rose +104 bcf, above expectations of +101 bcf and well above the 5-year average build for this time of year of +79 bcf.  As of May 2, nat-gas inventories were down -16.5% y/y and +1.4% above their 5-year seasonal average, signaling adequate nat-gas supplies.  In Europe, gas storage was 41% full as of May 5, versus the 5-year seasonal average of 51% 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 May 2 rose +2 to 101 rigs, modestly 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).