February Nymex natural gas (NGG26) on Tuesday closed up +0.010 (+0.29%),
Feb nat-gas prices added to Monday's sharp rally on Tuesday and posted modest gains. Expectations of colder US weather, which will boost nat-gas heating demand, are supporting prices. Forecaster Atmospheric G2 said Tuesday that the outlook has shifted colder for the eastern two-thirds of the US for January 18-22. Also, forecasts trended "much colder" in the Rockies, Northwest, and Midwest for January 23-27.
Projections for lower US nat-gas production are supportive for prices. The EIA on Tuesday 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. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
Last Friday, nat-gas prices sank to a 2.5-month nearest-futures low after forecasts of warmer temperatures across the US bolstered the outlook for reduced nat-gas heating demand, allowing storage levels to rebuild.
US (lower-48) dry gas production on Tuesday was 113.3 bcf/day (+8.4% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 94.9 bcf/day (-18.6% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 20.4 bcf/day (+12.4% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended January 3 rose +6.7% y/y to 82,732 GWh (gigawatt hours), and US electricity output in the 52-week period ending January 3 rose +3.0% y/y to 4,306,606 GWh.
Last Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended January 2 fell by -119 bcf, a larger draw than the market consensus of -13 bcf and much larger than the 5-year weekly average draw of -92 bcf. As of January 2, nat-gas inventories were down -3.5% y/y and were +1.0% above their 5-year seasonal average, signaling ample nat-gas supplies. As of January 10, gas storage in Europe was 55% full, compared to the 5-year seasonal average of 70% 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 9 fell by -1 to 124 rigs, modestly below the 2.25-year high of 130 set on November 28. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
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.
More news from Barchart
- This AI Data Center Power Stock is About to Break Out. Spot the Trade as It Unfolds With This Chart Signal.
- How High Can U.S. Natural Gas Futures Rise?
- Barchart- Commodity Roundup- November’s Top Performers and Underperformers
- Big Money is Betting on Natural Gas Prices to Break Out. Here’s the Setup.
