September Nymex natural gas (NGU25) on Thursday closed up +0.074 (+2.69%).

Sep nat-gas prices moved sharply higher on Thursday due to a lower-than-expected build in weekly nat-gas inventories.  The EIA reported Thursday that nat-gas inventories rose +13 bcf for the week ended August 15, below expectations of +18 bcf and the five-year average for this time of year of +35 bcf.  

Nat-gas prices have been under pressure over the past month and tumbled to a 9.25-month nearest-futures low this week.  Nat-gas prices have retreated as summer weather cooled and as the US boosted its nat-gas production to near record highs.  Forecaster Atmospheric G2 said Thursday that forecasts shifted cooler across most of the US for August 31-September 4, which will curb nat-gas demand from electricity providers to run air conditioning.

Ramped-up US nat-gas production is another bearish factor for prices.  Last Tuesday, the EIA raised its forecast for 2025 US nat-gas production by +0.5% to 106.44 bcf/day from July's estimate of 105.9 bcf/day.  The EIA raised its forecast for 2026 US nat-gas production by +0.7% to 106.09 from July's 105.4 bcf/day forecast.  US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.

US (lower-48) dry gas production on Thursday was 107.5 bcf/day (+5.2% y/y), according to BNEF.  Lower-48 state gas demand on Thursday was 79.4 bcf/day (+6.1% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Thursday were 14.6 bcf/day (-6.9% w/w), according to BNEF.

As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended August 16 rose +7.1% y/y to 99,160 GWh (gigawatt hours), and US electricity output in the 52-week period ending August 16 rose +2.7% y/y to 4,264,139 GWh.

Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended August 15 rose +13 bcf, below the consensus of +18 bcf and well below the 5-year weekly average of +35 bcf.  As of August 15, nat-gas inventories were down -3.0% y/y, but were +5.8% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of August 19, gas storage in Europe was 74% full, compared to the 5-year seasonal average of 82% 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 August 15 fell by -1 to 122 rigs, slipping a bit farther from the 2-year high of 124 rigs posted on August 1.  In the past year, the number of gas rigs has risen from the 4-year low of 94 rigs reported in September 2024.