April Nymex natural gas (NGJ26) on Tuesday closed down -0.100 (-3.21%), adding to Monday's -2.07% decline. Nat-gas prices have given back part of last week's overall +11.44% rally.
Nat-gas prices fell on Tuesday due to milder weather and President Trump's insistence that the war in Iran will soon end.
President Trump on Monday said, "I think the war is very complete, pretty much" and that the military operation is "very far" ahead of its 4-5 week timeframe. At a press conference Monday evening, President Trump was asked when the war would end, and he answered, “I think soon, very soon.”
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.
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.
Baker Hughes reported last 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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