March Nymex natural gas (NGH26) on Monday closed down by -0.284 (-8.30%).
March nat-gas prices on Monday sold off to a 3-week low and settled sharply lower on the outlook for warmer temperatures across large parts of the US, which will likely reduce nat-gas heating demand. The Commodity Weather Group said Monday that above-average temperatures are expected across the Midwest and South through February 20. Nat-gas prices also have some negative carryover from last Friday when Baker Hughes reported that active US nat-gas drilling rigs increased to a 2.5-year high, suggesting higher near-term gas production.
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 Monday was 113.4 bcf/day (+2.2% y/y), according to BNEF. Lower-48 state gas demand on Monday was 104.0 bcf/day (+3.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 19.2 bcf/day (+4.9% w/w), according to BNEF.
Projections for lower US nat-gas production are supportive for prices. The EIA on January 13 cut its forecast for 2026 US dry nat-gas production to 107.4 bcf/day from last month's estimate of 109.11 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
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.
More news from Barchart
- Natural Gas Prices Just Hit $6. How Much Higher Will They Go Here Amid Winter Storm Fern?
- Our Top Technical Strategist Explains How to Invest in the 'Age of Electricity'
- Energy Commodities in Q4 and 2025- What are the Prospects for Q1 2026 and Beyond?
- This AI Data Center Power Stock is About to Break Out. Spot the Trade as It Unfolds With This Chart Signal.
