March Nymex natural gas (NGH26) on Thursday closed up by +0.044 (+1.41%).
March nat-gas prices settled higher on Thursday due to an above-average decline in weekly nat-gas storage. Â The EIA reported Thursday that nat-gas inventories fell -249 bcf in the week ended February 6, a smaller decline than expectations of -257 bcf, but a much larger draw than the five-year average for this time of year of -146 bcf. Â
Gains in nat-gas prices were muted on Thursday due to forecasts of above-average US temperatures, which will reduce nat-gas heating demand. Â The Commodity Weather Group said Thursday that above-average temperatures were expected across the Midwest and South through February 21. Â
US (lower-48) dry gas production on Thursday was 113.8 bcf/day (+8.5% y/y), according to BNEF. Â Lower-48 state gas demand on Thursday was 101.1 bcf/day (-10.7% y/y), according to BNEF. Â Estimated LNG net flows to US LNG export terminals on Thursday were 19.6 bcf/day (+1.7% w/w), according to BNEF.
Projections for higher US nat-gas production are bearish for prices. Â 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. Â 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. Â 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. Â 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 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.
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. Â 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. Â As of February 10, gas storage in Europe was 36% full, compared to the 5-year seasonal average of 52% 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. Â In the past year, the number of gas rigs has risen from the 4.75-year low of 94 rigs reported in September 2024.
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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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