New York — US spot natural gas prices dipped back into familiar territory in the $2 to $3/MMBtu range in Feb. 22 trading as the storm-driven supply crunch continued to ease amid rising production and falling demand.

At midsession, cash prices at US benchmark Henry Hub were trading at $2.84/MMBtu, down more than $2 from the prior session's settlement, data from Intercontinental Exchange showed.

In the hard-hit Midcontinent region, prices also continued falling at ANR, Okla., Enable Gas, NGPL Midcontinent, ONEOAK, Okla., Panhandle, and Southern Star – all trading in a narrow range between the upper-$2.50s to low-$2.70s, down from prices as high as $1,100/MMBtu last week.

In East Texas, where cash markets also climbed into the hundreds recently, prices were down, with Houston Ship Channel and Katy Hub both pricing in the $2.50s/MMBtu area.

Production

Over the weekend, temperatures in Midland, Texas climbed into the 60s Fahrenheit – up from lows in the single digits last week – allowing lost production in the nearby Permian Basin to recover. On Feb. 22, output from West Texas was estimated at 11.1 Bcf/d, already about 2.7 Bcf above its recent storm-driven low, S&P Global Platts Analytics data showed.

In East Texas, producers in the Haynesville also got a reprieve from frigid weather as temperatures in nearby Shreveport, La. climbed into the mid-60s F. In the Haynesville, production was estimated Feb. 22 at 10.5 Bcf/d – up more than 4.2 Bcf over the weekend from its own storm-driven low.

At the US level, smaller production gains across other basins, including the Denver-Julesburg, the Bakken, the SCOOP/STACK and the Offshore Gulf of Mexico, boosted total domestic output to 85.8 Bcf/d Feb. 22 – nearly 11 Bcf above last week's more-than-three-year low, Platts Analytics data showed.

Demand

As US production continues climbing, warmer weather has led a 27% decline in total gas demand since mid-February to an estimated 111.2 Bcf/d Feb. 22. As US population-weighted temperatures continue warming to over 50 degrees by the approaching weekend, total domestic demand including exports is forecast to dip below 100 Bcf/d.

In the Midcontinent, regional demand was estimated around 4.9 Bcf/d Feb. 22, or at just 41% of its recent record high. In a further sign of market easing, net outbound gas transmissions from the Midcontinent resumed over the weekend, hitting 1 Bcf/d Feb. 22, the highest level since Feb. 9.

In Texas, demand fell to 13.7 Bcf/d Feb. 22, down from the Lone Star State's own record high last week at 23.7 Bcf/d. Gas exports from the state also ramped up over the weekend, with net pipeline outflows climbing to 7.9 Bcf/d and LNG exports from Freeport and Corpus Christi hitting a combined 1.9 Bcf/d.

Forwards

In the Midcontinent, forward gas prices for balance-February and March have remained elevated at over $3/MMBtu amid concerns over further supply disruptions and possible storage shortfalls this winter.

In East Texas, balmo prices at Houston Ship Channel and Katy ended trading at over $4/MMBtu Feb. 19, with March priced in the low-$3s/MMBtu, S&P Global Platts most recently published M2MS data shows.