April Nymex natural gas (NGJ26) on Friday closed up by +0.032 (+1.13%).
April nat-gas prices settled higher on Friday on geopolitical risks. Gas prices rallied in sympathy with Friday's rally in crude oil to a 7-month high on fears that a conflict with Iran could disrupt regional shipments of liquified natural gas (LNG).
Gains in nat-gas prices on Friday were limited due to forecasts of warmer-than-normal late-winter weather in the US. potentially reducing nat-gas heating demand. The Commodity Weather Group said Friday that above-normal temperatures are expected in the eastern half of the US for March 4-13.
US (lower-48) dry gas production on Friday was 113.6 bcf/day (+6.3% y/y), according to BNEF. Lower-48 state gas demand on Friday was 86.0 bcf/day (+5.9% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 19.9 bcf/day (+1.5% 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 negative factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended February 21 fell -13.46% y/y to 78,464 GWh (gigawatt hours). However, US electricity output in the 52-week period ending February 21 rose +1.7% y/y to 4,302,222 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended February 20 fell by -52 bcf, a slightly larger draw than the market consensus of -50 bcf but well below the 5-year weekly average draw of -168 bcf. As of February 20, nat-gas inventories were up +9.7% y/y and -0.3% below their 5-year seasonal average, signaling near-normal nat-gas supplies. As of February 24, gas storage in Europe was 30% full, compared to the 5-year seasonal average of 47% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending February 27 rose by 1 to a 2.5-year high of 134 rigs. 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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