July Nymex natural gas (NGN25) on Friday closed down by -0.075 (-2.13%).

July nat-gas prices on Friday were under pressure on signs of abundant supplies.  EIA data shows that as of May 23, US nat-gas inventories are +3.9% above their five-year seasonal average.

The outlook for cooler US spring temperatures is also weighing on nat-gas prices.  The Commodity Weather Group said Thursday that forecasts have turned cooler for the central US for June 3-7, which could curb nat-gas demand from electricity providers to run air conditioning.

Lower-48 state dry gas production Friday was 105.9  bcf/day (+3.8% y/y), according to BNEF.  Lower-48 state gas demand Friday was 68.1 bcf/day (+3.5% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 13.6 bcf/day (-6.1% 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 Thursday that total US (lower-48) electricity output in the week ended May 24 fell -4.4% y/y to 77,837 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 24 rose +3.25% y/y to 4,249,859 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 23 rose +101 bcf, right on expectations, but above the 5-year average build for this time of year of +98 bcf.  As of May 23, nat-gas inventories were down -11.7% y/y and +3.9% above their 5-year seasonal average, signaling adequate nat-gas supplies.  In Europe, gas storage was 47% full as of May 26, versus the 5-year seasonal average of 58% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending May 30 rose +1 to 99 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).