March Nymex natural gas (NGH26) on Wednesday closed down by -0.020 (-0.66%).
March nat-gas prices on Wednesday added to Tuesday's sharp losses and posted a 4-month nearest-futures low. Nat-gas prices are slumping as weather forecasts call for above-normal temperatures across the eastern half of the US for the rest of this month, potentially curbing nat-gas heating demand. Also, the warmer-than-normal temperatures will allow US nat-gas storage levels to rebuild. The Commodity Weather Group on Wednesday said above-normal temperatures are expected across the eastern half of the US through February 22, while mostly normal seasonal weather is expected for the following week.
US (lower-48) dry gas production on Wednesday was 114.0 bcf/day (+8.9% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 85.0 bcf/day (-31.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 19.9 bcf/day (+2.5% w/w), according to BNEF.
Projections for higher US nat-gas production are bearish for prices. Last Tuesday, the EIA 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 posting a 2.5-year high last Friday.
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.
As a bullish factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended February 7 rose +15.42% y/y to 91,4595 GWh (gigawatt hours), and US electricity output in the 52-week period ending February 7 rose +2.59% y/y to 4,315,797 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will fall by -149 bcf for the week ended February 13.
Last Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended February 6 fell by -249 bcf, a smaller draw than the market consensus of -258 bcf but well above the 5-year weekly average draw of -146 bcf. As of February 6, nat-gas inventories were down -3.6% y/y and -5.5% below their 5-year seasonal average, signaling tight nat-gas supplies. As of February 16, gas storage in Europe was 33% full, compared to the 5-year seasonal average of 49% 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 13 rose by +3 to a 2.5-year high of 133 rigs. 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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