April Nymex natural gas (NGJ26) on Monday closed down -0.066 (-2.07%), giving back part of last Friday’s rally of +6.09%.
April nat-gas prices on Monday rallied to a 5-week high but then fell back and closed the day lower.
Nat-gas prices initially rallied on Monday as crude oil soared more than +10% after Israel on Saturday bombed 30 Iranian fuel depots. However, oil prices then fell back later in the day after the G-7 finance ministers said they stand ready to release strategic oil reserves if needed. In addition, President Trump told CBS News in a phone interview that “I think the war is very complete, pretty much” and that the military operation is “very far” ahead of its 4-5 week timeframe.
Nat-gas prices surged last week, with European nat-gas prices climbing to a 3-year high last Tuesday due to the war in Iran. Last 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.
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 last 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.
Last 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.
