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).
