Natural gas prices rise amid global supply disruptions

April Nymex Natural Gas (NGJ26) closed Tuesday up +0.094 (+3.18%).

April natural gas prices rose sharply on Tuesday on prospects for stronger demand for U.S. natural gas supplies. On Monday, Qatar shut down 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 the world’s supply of liquefied natural gas and its closure could boost US natural gas exports. Natural gas prices were also supported by Tuesday’s +22% rise in European natural gas prices to a three-year high.

Natural gas prices extended gains Tuesday as updated weather forecasts called for colder temperatures in the United States, which could boost demand for natural gas for heating. The Commodity Weather Group said Tuesday that forecasts have shifted to colder weather across the United States through March 12, although the eastern half of the country will remain above normal.

US (Lower 48) dry gas production on Tuesday was 112.8 Bcf/day (+4.9% YoY), according to BNEF. Gas demand from the lower 48 states on Tuesday was 86.3 bcf/day (-5.6% year over year), according to BNEF. Estimated net LNG flows to US LNG export terminals on Tuesday were 19.6 bcf/day (+1.3% w/w), according to BNEF.

Projections of greater natural gas production in the United States are bearish for prices. On Feb. 17, the EIA raised its forecast for U.S. dry natural gas production in 2026 to 109.97 bcf/day from last month’s estimate of 108.82 bcf/day. U.S. natural gas production is currently near a record level, with active U.S. natural gas platforms hitting a two-and-a-half-year high last Friday.

Natural gas prices hit a three-year high on January 28, boosted by the massive storm that hit the United States with cold Arctic weather. The well-below-normal temperatures caused gas wells to freeze, disrupted production in Texas and elsewhere and fueled a surge in demand for natural gas for heating. About 50 billion cubic feet of natural gas were knocked out of service, or about 15% of total U.S. natural gas production, due to freezes.

As a negative factor for gas prices, the Edison Electric Institute reported last Wednesday that US (Lower 48) electricity production in the week ended February 21 fell -13.46% year-over-year to 78,464 GWh (gigawatt hours). However, US electricity production in the 52-week period ending February 21 increased +1.7% year-on-year to 4,302,222 GWh.

Last Thursday’s EIA weekly report was bearish for natural gas prices, as natural gas inventories for the week ended February 20 fell -52 bcf, a slightly larger drop than the market consensus of -50 bcf but well below the 5-year average weekly decline of -168 bcf. As of February 20, natural gas inventories increased +9.7% year-on-year and -0.3% below their five-year seasonal average, indicating near-normal natural gas supply. As of March 1, gas storage in Europe was 30% full, compared to the five-year seasonal average of 45% for this time of year.

Baker Hughes reported last Friday that the number of active natural gas drilling rigs in the United States in the week ending February 27 increased by 1 to a 2.5-year high of 134 rigs. Over the past 17 months, the number of gas rigs has increased from the 4.75-year low of 94 rigs reported in September 2024.

On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com