June Nymex natural gas (NGM25) on Monday closed down by -0.149 (-3.93%).

June nat-gas prices on Monday fell from a 1-month high and settled sharply lower on the outlook for near-normal US temperatures to reduce electricity demand for air conditioning.  On Monday, forecaster Atmospheric G2 said warm temperatures initially forecast for the west and north-central US for May 17-21 have shifted cooler, signaling expected air-conditioning demand could be less than previously thought.  

Lower-48 state dry gas production Monday was 105.6  bcf/day (+4.7% y/y), according to BNEF.  Lower-48 state gas demand Monday was 62.8 bcf/day (-0.2% y/y), according to BNEF.  LNG net flows to US LNG export terminals Monday were 15.2 bcf/day (+5.3% 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 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.

Last 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 9 was unchanged at 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).