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.
