July Nymex natural gas (NGN25) on Friday closed up by +0.107 (+2.91%).

July nat-gas prices on Friday rallied to a 1-week high and settled sharply higher as US weather forecasts turned hotter, potentially boosting nat-gas demand from electricity providers to run air-conditioning.   Forecaster Atmospheric G2 said Friday that forecasts shifted warmer for the South and Northwest, with early-summer warmth expected over the northern half of the country for June 11-15.

Lower-48 state dry gas production Friday was 106.1  bcf/day (+4.6% y/y), according to BNEF.  Lower-48 state gas demand Friday was 72.4 bcf/day (-1.0% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 13.6 bcf/day (+0.9% 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 Wednesday that total US (lower-48) electricity output in the week ended May 31 fell -1.8% y/y to 76,711 GWh (gigawatt hours), although US electricity output in the 52-week period ending May 31 rose +3.28% y/y to 4,248,428 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended May 30 rose +122 bcf, above expectations of +113 bcf and well above the 5-year average build for this time of year of +98 bcf.  As of May 30, nat-gas inventories were down -10.4% y/y and +4.7% above their 5-year seasonal average, signaling adequate nat-gas supplies.  In Europe, gas storage was 49% full as of June 2, versus the 5-year seasonal average of 60% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending June 6 rose +5 to a 15-month high of 114 rigs, moderately 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).