March Nymex natural gas (NGH26) on Tuesday closed down by -0.070 (-2.35%). March nat-gas prices tumbled to a 4.25-month nearest-futures low on Tuesday and settled sharply lower.   The outlook for warmer US temperatures, which will reduce nat-gas heating demand, is weighing on prices.  On Tuesday, the Commodity Weather Group said forecasts shifted warmer, with above-normal temperatures expected across the western half of the US through the end of the month.  Also, high US nat-gas production and warmer weat ...

Core Insights - Natural gas prices experienced a recovery, closing up by 1.41% on March Nymex, driven by short-covering and expectations of a significant withdrawal from US natural gas storage levels [1] Group 1: Price Movements - March natural gas prices rose after hitting a four-week low, with a consensus expectation of a withdrawal of 257 billion cubic feet (bcf) from US nat-gas inventories, significantly higher than the five-year average of 146 bcf [1] - Initial price movements were downward due to forecasts of above-average temperatures in the US, which are expected to reduce heating demand for natural gas [2] Group 2: Production and Demand - The EIA has increased its forecast for US dry natural gas production in 2026 to 109.97 bcf/day, up from 108.82 bcf/day, indicating a bearish outlook for prices as production approaches record highs [3] - Current US dry gas production stands at 112.8 bcf/day, reflecting a year-over-year increase of 7.1%, while demand has decreased to 99.0 bcf/day, down 11.7% year-over-year [5] Group 3: Market Influences - A significant spike in natural gas prices occurred on January 28 due to a massive storm that caused Arctic cold weather, leading to production disruptions and increased heating demand [4] - The Edison Electric Institute reported a year-over-year increase in US electricity output, which may support natural gas prices, with a rise of 15.42% to 91,459.5 GWh for the week ending February 7 [6]

Group 1 - October Nymex natural gas prices closed down by $0.088, a decrease of 2.82%, due to expectations of increased US gas inventories in the near term [1] - Seasonal pipeline maintenance along the Gulf Coast is expected to lead to a decline in natural gas exports, which will increase supplies in storage [1] - The EIA's weekly report anticipates a rise of 69 billion cubic feet (bcf) in natural gas inventories for the week ending September 5, surpassing the five-year average increase of 56 bcf [1] Group 2 - Warmer weather forecasts in the US are expected to limit the downside for natural gas prices, as increased demand from electricity providers is anticipated due to higher air conditioning usage [2] - Forecasts indicate above-normal temperatures in the Midwest and East for the period of September 15-24 [2] Group 3 - US natural gas production has recently been a bearish factor for prices, with the EIA raising its 2025 production forecast by 0.2% to 106.63 bcf/day [3] - Current US natural gas production is near record highs, with active rigs reaching a two-year high [3] Group 4 - US dry gas production was reported at 107.2 bcf/day, reflecting a year-over-year increase of 5.9% [4] - Lower-48 state gas demand was recorded at 70.6 bcf/day, showing a year-over-year decrease of 2.0% [4] - Estimated LNG net flows to US export terminals were 14.4 bcf/day, down 5.8% week-over-week [4] - US electricity output rose by 1.03% year-over-year to 83,003 GWh for the week ending September 6, and increased by 2.97% year-over-year to 4,264,559 GWh over the past 52 weeks [4] - Natural gas inventories increased by 55 bcf for the week ending August 29, aligning with market consensus and above the five-year weekly average of 36 bcf [4] - As of August 29, natural gas inventories were down 2.2% year-over-year but 5.6% above the five-year seasonal average, indicating sufficient supplies [4] - European gas storage was reported to be 79% full as of September 7, compared to the five-year seasonal average of 86% [4]