March Nymex natural gas (NGH26) on Friday closed up by +0.436 (+11.13%).
March nat-gas prices rallied sharply on Friday, but remained below Wednesday's 3-year nearest-futures (G26) high. Â Nat-gas prices have carryover support from Thursday's weekly EIA inventory report that showed a larger-than-expected draw in gas storage levels. Â Also, nat-gas prices are climbing as the current Arctic cold blast enveloping the US is boosting heating demand and bolstering expectations for another above-average drawdown in nat-gas storage. Â
Forecasts of below-normal US temperatures to linger will increase heating demand and are bullish for nat-gas prices. Â The Commodity Weather Group said Friday that below-normal temperatures will persist in the Upper Midwest, Mid-Atlantic, and Northeast for February 4-8. Â
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.
US (lower-48) dry gas production on Friday was 110.0 bcf/day (+3.4% y/y), according to BNEF. Â Lower-48 state gas demand on Friday was 128.7 bcf/day (+38.4% y/y), according to BNEF. Â Estimated LNG net flows to US LNG export terminals on Friday were 17.7 bcf/day (-8.3% w/w), according to BNEF.
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.
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 28, gas storage in Europe was 43% full, compared to the 5-year seasonal average of 58% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending January 30 rose by +3 to 125 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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