March Nymex natural gas (NGH26) on Monday closed sharply lower by -1.117 (-25.65%).
March nat-gas prices plunged to a 3-week nearest-futures low on Monday and settled sharply lower. Â The recovery in US nat-gas production sent prices tumbling on Monday, as production rose to 111.6 bcf, the highest in nearly two weeks, as more production returned to service after being knocked offline by last week's winter storm. Â Losses in nat-gas prices accelerated on Monday after the Commodity Weather Group said the 10-day weather outlook for the US turned warmer, potentially reducing nat-gas heating demand. Â
Natural gas prices surged to a 3-year high last 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 came offline last week, or about 15% of total US natural gas production.
US (lower-48) dry gas production on Monday was 111.6 bcf/day (+5.7% y/y), according to BNEF. Â Lower-48 state gas demand on Monday was 117.3 bcf/day (+34.4% y/y), according to BNEF. Â Estimated LNG net flows to US LNG export terminals on Monday were 18.4 bcf/day (+85.9% 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 last 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.
Last 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 31, gas storage in Europe was 41% full, compared to the 5-year seasonal average of 57% 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 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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