March Nymex natural gas (NGH26) on Thursday closed up by +0.186 (+4.98%).
March nat-gas prices on Thursday settled higher, but remained below Wednesday's 3-year high due to a larger-than-expected decline in weekly gas storage. Â The EIA reported on Thursday that nat-gas inventories for the week ended January 23 fell -242 bcf, a larger draw than expectations of -238 bcf. Â
Nat-gas prices also found support Thursday on the outlook for below-normal US temperatures to persist, potentially boosting heating demand and further depleting gas storage levels. Â The Commodity Weather Group said Thursday that well-below-average temperatures are expected across the eastern half of the US through early February.
Natural gas prices have soared by more than 120% over the past week, hitting a 3-year high on Wednesday, driven by the massive storm that just crossed the US and the Arctic blast of cold weather. Â The cold weather 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 were offline Saturday through Monday, or about 15% of total US natural gas production. Â Some nat-gas production is slowly coming back online.
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 Thursday was 108.5 bcf/day (+3.1% y/y), according to BNEF. Â Lower-48 state gas demand on Thursday was 129.2 bcf/day (+33.2% y/y), according to BNEF. Â Estimated LNG net flows to US LNG export terminals on Thursday were 18.7 bcf/day (-5.9% w/w), according to BNEF.
As a negative factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended January 24 fell -6.3% y/y to 91,131 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 24 rose +2.1% y/y to 4,286,060 GWh.
Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended January 23 fell by -242 bcf, a larger draw than the market consensus of -238 bcf and the 5-year weekly average draw of -208 bcf. Â As of January 23, nat-gas inventories were up +9.8% y/y and were +5.3% above their 5-year seasonal average, signaling ample nat-gas supplies. Â As of January 27, gas storage in Europe was 44% full, compared to the 5-year seasonal average of 59% 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.
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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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