Natural Gas Futures under $3 as Market Weighs Uncertainty
Natural gas prices are dropping once more after a cold front failed to spark gas rate increases in the Northeast.
Quick overview
- The eastern U.S. experienced warming temperatures, leading to lower gas prices and LNG futures dropping below $3.
- Despite heavy snowstorms in the Northeast, heating demand remains mild across the U.S., contributing to decreased prices.
- LNG exports are increasing, reaching 20.2 billion cubic feet, but warm weather forecasts are expected to reduce demand.
- Overall, indicators suggest that gas prices will continue to decline as supply increases and demand decreases.
The eastern half of the United States warmed on Tuesday, leading to lower gas prices that pushed the LNG futures below $3 and near October 2025 lows.
Heavy snowstorms in the Northeast were expected this week, but conditions have not been as bad as anticipated, and heating demand remains mild throughout the U.S. Exports of LNG are increasing, though, with export plants achieving 20.2 billion cubic feet in outflows over the weekend.
That is close to record levels and about 24% more than the same time last year. Flows increased to multiple facilities around the U.S., signaling that production is in full swing and that demand outside the U.S. is still relatively high.
Price Bump Erased as Expectations Change
Initially, the price of U.S. natural gas futures rose 4% on Tuesday thanks to cold weather expectations. But the price then dropped sharply as more weather data came in. The National Oceanic and Atmospheric Administration said that warm weather was coming for the next few weeks.
Supply to the lower 48 states managed a record high of 108.7 bcfd this week, and that data has further pushed prices down. Gains are expected to level out quickly as demand falls and supply increases.
There is a push and pull on the gas futures right now from record high exports and warm weather forecasts. The two factors are likely to keep the price of gas futures right around the $3 mark until one of them slips or becomes stronger. Of course, weather forecasts are calling for increasingly warm temperatures going into March, so we expect that the market will see diminishing prices for LNG.
The initial lead on gas prices from Northeast cold weather has started to disappear, and it may be completely lost soon. Even with export levels high, we do not expect that this factor will have such a strong pull on the prices in the coming weeks. Warm weather is likely to hit those areas the gas is being exported to, and demand is then going to drop. Right now, at just below $3, this may be the highest we will see gas futures for the next few weeks unless something drastic changes.
All indicators point toward dropping prices as demand decreases and production ramps up. With several new facilities being opened in the United States and among its trade partners, supply levels could reach record highs this summer and push prices down incredibly low.
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