April Nymex natural gas (NGJ26) on Thursday closed up +0.047 (+1.59%).
Nat-gas prices settled higher on Thursday after weekly US gas storage levels fell more than expected. The EIA reported on Thursday that nat-gas inventories fell -54 bcf in the week ended March 20, a steeper decline than expectations of -48 bcf.
However, gains in nat-gas were limited on Thursday amid warming US weather forecasts, potentially reducing nat-gas heating demand. On Thursday, the Commodity Weather Group said forecasts are trending warmer, with above-average temperatures expected across most of the US through April 3.
Nat-gas prices also have medium-term support after Qatar last Thursday reported "extensive damage" at the world's largest natural gas export plant at Ras Laffan Industrial City. Qatar said the attacks by Iran damaged 17% of Ras Laffan's LNG export capacity, a damage that will take three to five years to repair. The Ras Laffan plant accounts for about 20% of global liquefied natural gas supply, and a reduction in its capacity could boost US nat-gas exports. Also, the closure of the Strait of Hormuz due to the war in Iran has sharply curtailed nat-gas supplies to Europe and Asia.
US (lower-48) dry gas production on Thursday was 113.2 bcf/day (+4.8% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 72.5 bcf/day (-11.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 20.1 bcf/day (+2.4% 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 in late February.
As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended March 21 rose +7.5% y/y to 77,717 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending March 21 rose +1.8% y/y to 4,317,398 GWh.
The consensus is that Thursday's weekly EIA nat-gas inventories will decline by -49 bcf in the week ended March 20, a larger draw than the five-year average for the week of -21 bcf.
Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended March 20 fell by -54 bcf, a larger draw than expectations of -48 bcf and the 5-year weekly average draw of -21 bcf. As of March 20, nat-gas inventories were up +4.9% y/y, and +0.8% above their 5-year seasonal average, signaling ample nat-gas supplies. As of March 24, gas storage in Europe was 28% full, compared to the 5-year seasonal average of 41% 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 20 fell by 2 to 131, 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.
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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