March Nymex natural gas (NGH26) on Wednesday closed down by -0.020 (-0.66%).
March nat-gas prices on Wednesday added to Tuesday's sharp losses and posted a 4-month nearest-futures low. Nat-gas prices are slumping as weather forecasts call for above-normal temperatures across the eastern half of the US for the rest of this month, potentially curbing nat-gas heating demand. Also, the warmer-than-normal temperatures will allow US nat-gas storage levels to rebuild. The Commodity Weather Group on Wednesday said above-normal temperatures are expected across the eastern half of the US through February 22, while mostly normal seasonal weather is expected for the following week.
US (lower-48) dry gas production on Wednesday was 114.0 bcf/day (+8.9% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 85.0 bcf/day (-31.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 19.9 bcf/day (+2.5% 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 bullish factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended February 7 rose +15.42% y/y to 91,4595 GWh (gigawatt hours), and US electricity output in the 52-week period ending February 7 rose +2.59% y/y to 4,315,797 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will fall by -149 bcf for the week ended February 13.
Last Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended February 6 fell by -249 bcf, a smaller draw than the market consensus of -258 bcf but well above the 5-year weekly average draw of -146 bcf. As of February 6, nat-gas inventories were down -3.6% y/y and -5.5% below their 5-year seasonal average, signaling tight nat-gas supplies. As of February 16, gas storage in Europe was 33% 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 13 rose by +3 to 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.
