September Nymex natural fuel (NGU26) on Tuesday closed down -0.012 (-0.43%).
Nat-gas costs settled decrease on Tuesday in sympathy with the -3% plunge in crude oil costs to a 1-week low. Losses in nat-gas were restricted on Tuesday amid forecasts for scorching US climate, doubtlessly boosting nat-gas demand from electrical energy suppliers to energy air-con use. The Commodity Weather Group said on Tuesday that forecasts shifted to hotter, with above-average temperatures expected across the Gulf, Midwest, and Mid-Atlantic from August 30 through September 8.
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US (lower-48) dry fuel manufacturing on Tuesday was 110.9 bcf/day (+1.4% y/y), according to BNEF. Lower-48 state fuel demand on Tuesday was 77.9 bcf/day (+2.8% y/y), according to BNEF. Estimated LNG web flows to US LNG export terminals on Tuesday were 17.4 bcf/day (-2.9% w/w), according to BNEF.
As a constructive issue for fuel costs, the Edison Electric Institute reported last Wednesday that US (lower-48) electrical energy output in the week ended August 15 rose +2.36% y/y to 101,498 GWh (gigawatt hours). Also, US electrical energy output in the 52 weeks ending August 15 rose +2.24% y/y to 4,359,446 GWh.
As a bearish issue, the US Energy Information Administration (EIA) on August 11 projected that US nat-gas storage ranges will swell to 3,985 bcf at the finish of October, the highest stage in 10 years and 5% above the five-year average. US nat-gas inventories are at present +6.7% above their 5-year seasonal average, a signal of sturdy provides.
Nat-gas costs have some damaging carryover from August 4, when Energy Transfer announced that the Hugh Brinson pipeline will be ready to operate at its full transportation capability of 1.5 bcf/day by September 1, permitting more fuel provides to stream from the Permian Basin to the US benchmark Henry Hub in Erath, Louisiana, boosting US home provides.
A bearish medium-term issue for nat-gas costs is hypothesis that a highly effective El Niño climate system will convey warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, decreasing nat-gas heating demand.
Last Thursday’s weekly EIA report was barely bearish as it confirmed a +16 bcf increase in US nat-gas inventories for the week ended August 14, above market expectations of +14 bcf, but below the 5-year weekly average of +29 bcf. As of August 14, nat-gas inventories were down -0.9% y/y and +6.2% above their 5-year seasonal average, signaling satisfactory nat-gas provides. As of August 23, fuel storage in Europe was 63% full, in contrast to the 5-year seasonal average of 80% full for this time of 12 months.