US natural gas futures dropped to $4/MMBtu on Friday, marking a 1.6% decline for the week, as escalating trade tensions between the U.S. and China stoked fears of a broader global recession.
US natgas prices join energy markets down
The latest sell-off in energy and equity markets followed China’s announcement of a sweeping 34% tariff on all U.S. goods, including energy products, in retaliation for Washington’s unilateral trade measures. Beijing urged the U.S. to withdraw its tariffs, condemning them as disruptive to global trade flows and critical supply chains—adding further pressure to already jittery commodity markets.
The heightened geopolitical uncertainty comes at a time when natural gas traders are already closely monitoring a delicate balance between supply and demand fundamentals. According to the latest weekly report from the U.S. Energy Information Administration (EIA), gas storage levels remain 4.3% below the five-year seasonal average, despite three consecutive weeks of net injections. While this suggests some underlying tightness, market sentiment has been tempered by signs of weakening demand and stabilizing weather patterns.
US LNG exports surge
In March, U.S. liquefied natural gas (LNG) exports surged to a record 15.8 billion cubic feet per day (bcfd), reflecting strong global demand, particularly from Europe and Asia. However, domestic production also hit a new high of 106.2 bcfd during the month, before beginning to ease slightly in early April. Analysts are watching closely to see if this marks the beginning of a sustained slowdown in output, especially amid falling prices and reduced rig activity.
Weather forecasts for the coming weeks point to near-normal temperatures through mid-April, limiting expectations for a strong rise in heating or cooling demand in the short term. With macroeconomic headwinds now dominating market sentiment, the natural gas market may continue to face volatility in the weeks ahead. Traders are eyeing upcoming inflation data and potential policy responses from both Washington and Beijing as key factors that could influence the broader energy complex.
