U.S. natural gas futures climbed above $3.775/MMBtu, rebounding from a seven-week low as risk appetite returned to the market and investors reassessed supply-demand dynamics following a sharp selloff. This surge in prices came as traders began to factor in improved market conditions after recent volatility, with the outlook for natural gas tightening in the coming months.
US natgas prices rise from seven-week low
Average production in the Lower 48 states rose slightly in April to 106.3 billion cubic feet per day, surpassing the previous month’s record, which was driven by increased drilling activity and higher output from shale regions. Mild weather in March, combined with relatively weak demand, likely contributed to a rare early-season storage build, marking the first such increase in inventories for that month since 2012. This early build has given the market some breathing room, although stockpiles remain well below historical averages for the time of year, fueling expectations of higher prices as the summer heating season approaches.
Potential outlook
Looking ahead, temperatures across the Lower 48 are expected to remain close to seasonal norms through April 22, which is likely to limit any significant demand spikes in the short term. This relatively stable weather pattern reduces the likelihood of sudden cold spells that could drive up heating demand. Meanwhile, liquefied natural gas (LNG) exports, which have been a key factor in supporting domestic gas prices, eased slightly to 15.7 billion cubic feet per day (bcfd) in April, down from a record 15.8 bcfd in March. While this small decline may reflect temporary adjustments in global LNG demand or logistical challenges, overall exports remain strong and continue to play a vital role in balancing supply in the U.S. market.
U.S. natural gas demand may face significant headwinds
However, U.S. natural gas demand may face significant headwinds later this year if the Trump administration’s new trade tariffs, particularly on steel and aluminum, lead to reduced industrial activity and dampen overall economic growth. In particular, the imposition of tariffs could make U.S. exports less competitive globally, potentially slowing the growth in LNG shipments and weakening the demand for gas from industrial sectors that rely on energy-intensive processes. As a result, while the immediate outlook for natural gas appears relatively stable, longer-term price dynamics could be influenced by broader economic factors, including trade policies and the potential for reduced growth in energy-consuming industries.
