June Nymex natural gas (NGM25) on Tuesday closed up sharply by +0.314 (+10.09%).

June nat-gas prices surged on Tuesday and settled sharply higher.  Nat-gas prices rallied on forecasts for warm weather that would boost nat-gas demand from electricity providers to run air conditioning.  On Tuesday, Traditional Energy said hot temperatures are expected in the western US for late May into early June.  Gains in nat-gas accelerated Tuesday on positive carryover from a jump in European nat-gas prices to a 6-week high.

Nat-gas prices on Monday slid to a 3-week low as cool US spring temperatures allowed inventories to build and weighed on prices.   EIA nat-gas inventories as of May 9 are +2.6% above their 5-year seasonal average, signaling adequate nat-gas supplies.  

Lower-48 state dry gas production Tuesday was 106.1  bcf/day (+5.1% y/y), according to BNEF.  Lower-48 state gas demand Tuesday was 67.5 bcf/day (-2.0% y/y), according to BNEF.  LNG net flows to US LNG export terminals Tuesday were 15.0 bcf/day (-0.2% w/w), according to BNEF.

A decline in US electricity output is negative 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 May 10 fell -2.8% y/y to 72,735 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 10 rose +3.6% y/y to 4,251,600 GWh.

Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 9 rose +110 bcf, right on expectations but well above the 5-year average build for this time of year of +83 bcf.  As of May 9, nat-gas inventories were down -14.6% y/y and +2.6% above their 5-year seasonal average, signaling adequate nat-gas supplies.  In Europe, gas storage was 45% full as of May 18, versus the 5-year seasonal average of 55% 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 16 fell -1 to 100 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).