US Gas Futures Dip on Growing Supply
Natural gas prices are dropping even as prices rise on other parts of the world due to fighting in Iran.
Quick overview
- Gas futures in the U.S. fell to $3.12 per MMBtu due to increased local supply and decreased exports.
- High inventories in the U.S. are contributing to lower LNG prices, despite ongoing conflicts in the Middle East.
- Expectations indicate that U.S. LNG exports will continue to decline as warmer weather reduces demand.
- New production facilities and increased output are likely to boost inventory levels, leading to further price decreases.
On Monday, gas futures in the United States fell to $3.12 per MMBtu as export numbers slipped and local supply increased, despite ongoing fighting in the Middle East.
The supply of natural gas may be in jeopardy in other parts of the world, but in the United States, inventories are high, bringing prices down slightly. Exports from the U.S. are also slipping as the weather warms outside the country.
These were the two factors that were keeping prices high, and now that they are changing, the price of LNG futures may continue to decline even with the United States and Iran fighting. Their conflict is mostly affecting gas prices in Europe and Asia where Iranian gas is exported to.
Gas Futures Expected to Rise Slowly
We do anticipate that ongoing war in the Middle East will cause U.S. LNG futures to increase but not at the same quick rate that LNG prices are climbing in other parts of the world. The United States sources most of its LNG internally, so there is little need for it to import in order to fill its inventory. What little gas it does import comes from the Caribbean and South American regions where fighting in the Middle East is having little impact.
Investors should expect U.S. exports to continue to drop for the LNG market as weather starts to warm further. That export market has been a very strong factor in keeping gas prices at the high end through the winter, but with the temperature rising, exports demand should diminish.
The inventory levels is the other changing factor bringing U.S LNG prices down right now, and that is a factor that will likely cause lower prices from month to month in 2026. All indications point to increasing supplies and diminishing withdrawals. Investors can keep monitoring EIA reports to see what size of withdrawals are being made, but with demand dropping as springtime sets in, the inventory should start to rise higher.
That is especially true as new production facilities open across the Western Hemisphere and new production lines are installed at U.S facilities. Gas production is up to 110 bcfd for March so far, and that rate should tip inventories back up to average levels very soon.
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