March Nymex natural gas (NGH26) on Tuesday closed higher by +0.074 (+2.29%).
March nat-gas prices settled higher on Tuesday, recovering some of Monday's 25% plunge. Mixed US weather prospects lifted nat-gas prices on Tuesday. The Commodity Weather Group said Tuesday that above-normal temperatures are expected across the Midwest and US South through February 17, but colder-than-normal temperatures are expected in the mid-Atlantic and Northeast through February 12.
Natural gas prices surged to a 3-year high last Wednesday, driven by the massive storm that just crossed the US and the Arctic blast of cold weather. The cold weather 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 last week, or about 15% of total US natural gas production.
US (lower-48) dry gas production on Tuesday was 110.5 bcf/day (+5.1% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 110.6 bcf/day (+26.7% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 19.1 bcf/day (+43.8% w/w), according to BNEF.
Projections for lower US nat-gas production are supportive for prices. The EIA on January 13 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.
As a negative factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended January 24 fell -6.3% y/y to 91,131 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 24 rose +2.1% y/y to 4,286,060 GWh.
Last Thursday's weekly EIA report was supportive for nat-gas prices, as nat-gas inventories for the week ended January 23 fell by -242 bcf, a larger draw than the market consensus of -238 bcf and the 5-year weekly average draw of -208 bcf. As of January 23, nat-gas inventories were up +9.8% y/y and were +5.3% above their 5-year seasonal average, signaling ample nat-gas supplies. As of February 1, gas storage in Europe was 41% full, compared to the 5-year seasonal average of 57% 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 30 rose by +3 to 125 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.
