March Nymex natural gas (NGH25) on Friday closed up +0.097 (+2.67%).
Mar nat-gas prices Friday extended this week’s rally as a Polar Vortex moved towards the central United States. The Commodity Weather Group said that forecasts shifted colder for the Midwest and southern US for Feb 19-23.
Nat-gas prices had carry-over support from Thursday's news that EIA nat-gas inventories fell -100 bcf in the week ended February 7, a larger draw than expectations of -91 bcf.
In a bullish longer-term factor for nat-gas prices, President Trump in January lifted the Biden administration's pause on approving gas export projects, thus moving into active consideration a backlog of about a dozen LNG export projects. Bloomberg reported that the Trump administration is close to approving its first LNG export project, a Commonwealth LNG export facility in Louisiana. Increased US capacity for exporting LNG would boost demand for US nat-gas and would be supportive of nat-gas prices.
Lower-48 state dry gas production Friday was 106.4 bcf/day (+0.5% y/y), according to BNEF. Lower-48 state gas demand Friday was 110.0 bcf/day (+14.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 15.4 bcf/day (+3.8% w/w), according to BNEF.
An increase in US electricity output is positive for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended February 8 rose +4.8% y/y to 79,239 GWh (gigawatt hours), and US electricity output in the 52-week period ending February 8 rose +2.6% y/y to 4,206,808 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended February 7 fell -100 bcf, a larger draw than expectations of -91 bcf, although a smaller draw than the 5-year average draw for this time of year of -144 bcf. As of February 7, nat-gas inventories were down -9.2% y/y and -2.8% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 47% full as of February 11, versus the 5-year seasonal average of 5% 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 14 rose +1 to 101 rigs, modestly above the 3-1/2 year low of 94 rigs posted on September 6, 2024. Active rigs have fallen since posting a 5-1/4 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
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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