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LNG, Natural Gas
February 26, 2025
By J Robinson
HIGHLIGHTS
Domestic output tops 105 Bcf/d, Feb. 25-26
Gas producers signal restraint, with caveats
NYMEX April, May futures hold up near $4
US gas production continued to rebound from a late February freeze-off, topping 105 Bcf/d from Feb. 25-26 adding to short-term pressure on the NYMEX futures market as US temperatures warm.
After tumbling to around 101 Bcf/d over the US President's Day Holiday weekend, US gas production has rebounded by over 4 Bcf/d, or about 4%, over the past week, propelled by returning output in the Permian Basin and Appalachia and a recent surge in receipts from the Haynesville.
In early February, US gas production hit record highs just shy of 107 Bcf/d before freezing weather began curtailing receipts – implying that output could continue rebounding into early March.
On recent earnings calls many US gas producers restated their intention to keep output roughly flat in 2025 – but also signaled a willingness to consider increases later this year in response to a more constructive pricing and market environment. On Feb. 25, executives at Coterra Energy said that the company plans to resume drilling in the Marcellus Shale in April after dropping all its rigs in the basin last fall. On its own fourth-quarter earnings call, Comstock Resources also noted its plan to bring another two rigs back after dropping the same number in early 2024.
Despite gas producers' mostly conservative approach, even the specter of rising gas production could be enough to begin weighing on gas prices as the 2024-2025 winter heating season winds down.
According to a short-range forecast from S&P Global Commodity Insights, US residential-commercial gas demand is projected to average just 32.5 Bcf/d over the next two weeks – down from an average 45.3 Bcf/d month to date. Near-term outlooks published by the US National Weather Service suggest similarly modest heating demand requirements into mid-March.
On Feb. 26, the expiring March gas futures contract tumbled to an intraday low at $3.86/MMBtu, dropping more than 30 cents on the day amid thin trading volume, data from CME Group showed.
While prices for April and May remained close to, or above $4, peak-summer gas prices for June, July, and August were in contango, trading around $4.20-$4.40.
"Weather remains a significant risk as forecasts for mid-March continue to evolve, but we still see support over $4 for April on early refill demands," Gary Cunningham, director of market research at Tradition Energy, wrote in an emailed message Feb. 26.
"Over the past several days, several producers have announced potential increases in output later in the year, which could result in some softening to winter 2025-2026 prices," he said.
With US gas storage levels on track to fall as much as 250-300 Bcf below the five-year average and LNG feedgas demand holding near record highs at over 16 Bcf/d – with more demand coming later this year and in early 2026– many analysts expect bullish momentum could continue into March, keeping NYMEX prompt-month gas prices close to, or even above, $4.
"Resolute natural gas pricing strength for the 2025 injection season... and a bullish long-term fundamental outlook suggests that the risks of a substantial price breakout higher may be larger than widely understood," Eli Rubin, senior energy analyst with EBW Analytics, wrote in a Feb. 26 market note to subscribers.
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