March Nymex natural gas (NGH26) on Tuesday closed down by -0.023 (-0.73%).
March nat-gas prices moved lower for a third session on Tuesday and posted a 4-week nearest-futures low. Forecasts of above-average US temperatures, which will reduce nat-gas heating demand, are weighing on prices. The Commodity Weather Group said Tuesday that warmer-than-normal weather is expected over most of the US, excluding the Pacific and Atlantic coasts, through February 19.
Projections for higher US nat-gas production are also bearish for prices. The EIA on Tuesday raised its forecast for 2026 US dry nat-gas production to 109.97 bcf/day from last month's estimate of 108.82 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs last Friday posting a 2.5-year high.
Natural gas prices surged to a 3-year high on January 28, driven by the massive storm that disrupted the US with Arctic cold weather. The well below normal temperatures caused freeze-ups in gas wells, disrupted production in Texas and elsewhere, and drove a spike in demand for natural gas for heating. About 50 billion cubic feet of natural gas came offline, or about 15% of total US natural gas production, due to freeze-ups.
US (lower-48) dry gas production on Tuesday was 112.8 bcf/day (+6.8% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 94.9 bcf/day (-11.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 19.5 bcf/day (+2.6% w/w), according to BNEF.
As a bullish factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended January 31 rose +21.4% y/y to 99,925 GWh (gigawatt hours), and US electricity output in the 52-week period ending January 31 rose +2.39% y/y to 4,303,577 GWh.
Last Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended January 30 fell by a record -360 bcf, a smaller draw than the market consensus of -378 bcf but well above the 5-year weekly average draw of -190 bcf. As of January 30, nat-gas inventories were up +2.8% y/y and were -1.1% below their 5-year seasonal average, signaling tighter nat-gas supplies. As of February 7, gas storage in Europe was 37% full, compared to the 5-year seasonal average of 54% 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 February 6 rose by +5 to 130 rigs, matching the 2.5-year high first set on November 28. In the past year, the number of gas rigs has risen from the 4.75-year low of 94 rigs reported in September 2024.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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