June Nymex natural gas (NGM25) on Friday closed up by +0.203 (+5.65%).

June nat-gas prices on Friday rallied to a 4-week high and settled sharply higher on the outlook for above-normal US temperatures to boost electricity demand for air conditioning.  On Friday, forecaster Xweather said temperatures will be above normal in the eastern half of the US through May 18, boosting nat-gas demand from electricity providers to power increased air-conditioning usage.  

Lower-48 state dry gas production Friday was 105.4  bcf/day (+5.1% y/y), according to BNEF.  Lower-48 state gas demand Friday was 66.0 bcf/day (-6.4% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 15.3 bcf/day (+4.0% 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 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.

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 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).