On Monday, August Nymex natural gas prices closed down $0.104 (3.62%), marking their lowest level in 2.5 months. This decline is primarily attributed to forecasts of cooler weather in the central and eastern U.S., reducing air conditioning needs, with Commodity Weather Group expecting normal to below-normal temperatures from August 1-5.
U.S. dry gas production was recorded at 113.1 billion cubic feet per day (bcf/day), a 3.7% year-over-year increase, while demand reached 81.4 bcf/day, rising 2.7% year-over-year. Estimated LNG net flows to export terminals stood at 18.1 bcf/day, up 2.4% week-over-week. In contrast, natural gas inventories increased by 32 bcf in the week ending July 17, slightly below expectations but above the five-year average.
Despite a rise in production and adequate supply signals, speculation of a powerful El Niño system bringing warmer temperatures this fall could further suppress demand. Additionally, Baker Hughes reported that the number of active U.S. natural gas drilling rigs increased by one to 127, still below the three-year high of 134 set in February.
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