March Nymex natural gas (NGH26) on Monday closed down by -0.062 (-2.03%).
March nat-gas prices gave up an early advance on Monday and settled lower after updated US weather forecasts called for above-normal temperatures into the first week of March, potentially reducing nat-gas heating demand. On Monday, the Commodity Weather Group said above-average temperatures are expected across the eastern half of the US through March 9. Nat-gas prices initially moved higher on Monday after weather forecasts called for below-normal temperatures to linger in the Northeast through March 4.
US (lower-48) dry gas production on Monday was 113.7 bcf/day (+9.0% y/y), according to BNEF. Lower-48 state gas demand on Monday was 108.2 bcf/day (+14.7% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 19.9 bcf/day (+1.6% w/w), according to BNEF.
Projections for higher US nat-gas production are bearish for prices. Last Tuesday, the EIA 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. US nat-gas production is currently near a record high, with active US nat-gas rigs posting a 2.5-year high last Friday.
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. 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. 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 negative factor for gas prices, the Edison Electric Institute reported last Thursday that US (lower-48) electricity output in the week ended February 14 fell -1.61% y/y to 83,348 GWh (gigawatt hours). However, US electricity output in the 52-week period ending February 14 rose +2.36% y/y to 4,314,431 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended February 13 fell by -144 bcf, a smaller draw than the market consensus of -149 bcf and the 5-year weekly average draw of -151 bcf. As of February 13, nat-gas inventories were down -1.5% y/y and -5.6% below their 5-year seasonal average, signaling tight nat-gas supplies. As of February 18, gas storage in Europe was 32% full, compared to the 5-year seasonal average of 49% 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 20 was unchanged at a 2.5-year high of 133 rigs. In the past year, the number of gas rigs has risen from the 4.75-year low of 94 rigs reported in September 2024.
