April Nymex natural gas (NGJ26) on Monday closed down -0.108 (-3.45%).
Nat-gas prices fell sharply on Monday amid negative carryover from a -5% plunge in crude oil prices on hopes that the Strait of Hormuz can soon be reopened to maritime traffic. Also, a mixed US weather report weighed on nat-gas prices on Monday, as the Commodity Weather Group said above-average temperatures are expected across the western half of the US through March 25, potentially curbing nat-gas heating demand.
Nat-gas prices surged to a 3-year high earlier this month due to the war in Iran. On March 2, Qatar shut its Ras Laffan plant, the world's largest natural gas export facility, after it was targeted by an Iranian drone attack. The Ras Laffan plant accounts for about 20% of global liquefied natural gas supply, and its closure could boost US nat-gas exports.
US (lower-48) dry gas production on Monday was 112.5 bcf/day (+4.9% y/y), according to BNEF. Lower-48 state gas demand on Monday was 92.8 bcf/day (+21.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 20.3 bcf/day (+8.8% w/w), according to BNEF.
Projections for higher US nat-gas production are bearish for prices. On February 17, 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.
As a positive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended March 7 rose +1.00% y/y to 78,133 GWh (gigawatt hours). Also, US electricity output in the 52-week period ending March 7 rose +1.69% y/y to 4,309,018 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended March 6 fell by -38 bcf, a smaller draw than the market consensus of -41 bcf and the 5-year weekly average draw of -64 bcf. As of March 6, nat-gas inventories were up +8.8% y/y and -0.9% below their 5-year seasonal average, signaling near-normal nat-gas supplies. As of March 14, gas storage in Europe was 29% full, compared to the 5-year seasonal average of 42% 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 March 13 rose by +1 to 133 rigs, just below the 2.5-year high of 134 rigs from February 27. In the past 17 months, the number of gas rigs has risen from the 4.75-year low of 94 rigs reported in September 2024.
