March Nymex natural gas (NGH26) on Thursday closed up by +0.186 (+4.98%).
March nat-gas prices on Thursday settled higher, but remained below Wednesday's 3-year high due to a larger-than-expected decline in weekly gas storage. The EIA reported on Thursday that nat-gas inventories for the week ended January 23 fell -242 bcf, a larger draw than expectations of -238 bcf.
Nat-gas prices also found support Thursday on the outlook for below-normal US temperatures to persist, potentially boosting heating demand and further depleting gas storage levels. The Commodity Weather Group said Thursday that well-below-average temperatures are expected across the eastern half of the US through early February.
Natural gas prices have soared by more than 120% over the past week, hitting a 3-year high on 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 were offline Saturday through Monday, or about 15% of total US natural gas production. Some nat-gas production is slowly coming back online.
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.
US (lower-48) dry gas production on Thursday was 108.5 bcf/day (+3.1% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 129.2 bcf/day (+33.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 18.7 bcf/day (-5.9% w/w), according to BNEF.
As a negative factor for gas prices, the Edison Electric Institute reported 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.
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 January 27, gas storage in Europe was 44% full, compared to the 5-year seasonal average of 59% 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 23 was unchanged at 122 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.
