US natural gas futures climbed to $4.2 per million British thermal units (MMBtu), the highest level in over a week, as supply constraints and strong demand from liquefied natural gas (LNG) export facilities provided upward pressure.
US natgas prices rise by 15% in the first quarter
The surge in prices was largely driven by record-high flows to LNG export plants, which averaged 15.8 billion cubic feet per day (bcfd) in March, surpassing the previous record of 15.6 bcfd set in February. The increase was bolstered by the start of new liquefaction units at the Plaquemines LNG plant in Louisiana, further expanding the US's export capacity.
At the same time, domestic daily natural gas production fell to a one-week low of 105.2 bcfd, contributing to supply concerns. However, on a broader scale, average US gas production for March stood at 106.0 bcfd, reflecting a modest increase from 105.1 bcfd in February. This overall production growth indicates that supply remains resilient despite temporary fluctuations in output.
Demand to be kept in check
Looking ahead, mild weather forecasts for the coming weeks are expected to keep domestic demand in check, allowing utilities to rebuild storage levels. If storage injections materialize, it could mark the first March stockpile increase since 2012, providing some relief to the market after significant winter withdrawals. However, even with the expectation of rising inventories, natural gas prices have already surged more than 15% in the first quarter of 2025. Stockpiles remain approximately 5% below the seasonal average due to heavy withdrawals during the colder-than-expected winter months, keeping market sentiment bullish in the near term.
Investors will be closely monitoring weather patterns, production trends, and export activity in the coming weeks, as these factors will determine whether the recent rally in gas prices continues or if a seasonal pullback occurs.
