February Nymex natural gas (NGG26) on Monday soared by +1.525 (+28.91%), bringing the rally since January 16 to a total of +119%.
Feb nat-gas prices on Monday spiked to a new 3.25-year nearest-futures high, driven by the massive storm that just crossed the US and the Arctic blast of cold weather. Â The cold weather caused major natural gas disruptions in Texas and elsewhere. Â The freeze reportedly caused the shutdown of about 12% of US natural gas production.
At the same time, the Arctic weather caused a spike in demand for natural gas for heating. Â
Projections for lower US nat-gas production are supportive for prices. Â 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. Â US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Friday was 109.6 bcf/day (+8.7% y/y), according to BNEF. Â Lower-48 state gas demand on Friday was 126.0 bcf/day (-0.5% y/y), according to BNEF. Â Estimated LNG net flows to US LNG export terminals on Friday were 19.8 bcf/day (+5.3% w/w), according to BNEF.
As a negative factor for gas prices, the Edison Electric Institute reported on January 14 that US (lower-48) electricity output in the week ended January 10 fell -13.15% y/y to 79,189 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 10 rose +2.5% y/y to 4,294,613 GWh.
Last Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended January 16 fell by -120 bcf, a larger draw than the market consensus of -98 bcf but smaller than the 5-year weekly average draw of -191 bcf. Â As of January 16, nat-gas inventories were up +6.0% y/y and were +6.1% above their 5-year seasonal average, signaling ample nat-gas supplies. Â As of January 21, gas storage in Europe was 48% full, compared to the 5-year seasonal average of 62% 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 January 23 was unchanged at 122 rigs, modestly below the 2.25-year high of 130 set on November 28. Â In the past year, the number of gas rigs has risen from the 4.5-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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