US natural gas futures dropped to $3.715 per million British thermal units (MMBtu) on Thursday, reversing the sharp 10% surge seen on Wednesday, as traders took a step back to reassess market fundamentals and react to changing dynamics in US trade policy.
US natgas prices fall after Wednesday surge
The pullback reflects a recalibration of sentiment amid signs that March may have seen a rare increase in natural gas storage levels — an event that has only occurred once before in that month, back in 2012. This anomaly is attributed to persistently mild weather and weaker-than-expected demand, which reduced the need for heating during what is typically still a high-consumption period.
Looking ahead, weather forecasts suggest near-normal temperatures across most of the United States through late April, further capping demand for residential and commercial heating. However, the export side remains a source of support for prices. US liquefied natural gas (LNG) exports continue to run at a robust pace, averaging 16.0 billion cubic feet per day (bcfd) so far in April — slightly above the record average observed in March, underscoring strong international demand.
Gas production slightly retreats from March highs
On the supply side, gas production has edged slightly lower after hitting record highs in March, signaling a potential tightening of the market if demand strengthens or weather shifts. At the same time, energy firms are facing new challenges, with crude oil prices plunging to four-year lows, which could discourage further investment in oil drilling — a key driver of associated natural gas output.
Adding another layer of uncertainty, President Trump announced a pause on new tariffs for several trading partners but simultaneously raised duties on Chinese imports to 125%. This aggressive move has sparked renewed fears of a slowdown in global economic growth, which could ripple through energy markets and dampen demand for both oil and natural gas in the months ahead.
