April Nymex natural gas (NGJ26) on Friday closed up by +0.183 (+6.09%).
April nat-gas prices rallied sharply on Friday and posted a 1-month high amid concern that the ongoing war in Iran could lead to longer-term disruption of global gas supplies. The possibility of a prolonged disruption to LNG supplies in the Middle East with the closure of the Strait of Hormuz could boost demand for US gas, which has had a limited impact from the Iran war on US production or exports.
Nat-gas prices surged this week, with European nat-gas prices climbing to a 3-year high on Tuesday due to the war in Iran. On Monday, Qatar shut its Ras Laffan plant, the world's largest natural gas export facility, after it was targeted by an Iranian drone attack. The Ras Laffan plant accounts for about 20% of global liquefied natural gas supply, and its closure could boost US nat-gas exports.
On the bearish side for nat-gas prices are forecasts for warmer US weather, potentially reducing nat-gas heating demand. On Friday, the Commodity Weather Group said well-above-average temperatures are expected across the eastern two-thirds of the US through March 10.
US (lower-48) dry gas production on Friday was 113.6 bcf/day (+6.4% y/y), according to BNEF. Lower-48 state gas demand on Friday was 77.6 bcf/day (-17.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 19.5 bcf/day (-0.7% 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 last Friday.
As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended February 28 rose +7.84% y/y to 82,888 GWh (gigawatt hours). Also, US electricity output in the 52-week period ending February 28 rose +1.8% y/y to 4,308,245 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended February 27 fell by -132 bcf, a larger draw than the market consensus of -124 bcf and the 5-year weekly average draw of -96 bcf. As of February 27, nat-gas inventories were up +7.2% y/y and -2.2% below their 5-year seasonal average, signaling near-normal nat-gas supplies. As of March 4, gas storage in Europe was 30% full, compared to the 5-year seasonal average of 44% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending March 6 fell by -2 to 132 rigs, falling back from the prior week's 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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