Natural Gas Futures Not Moving Despite Tightening Supply
Natural gas prices are hardly moving for now as positive and negative forces pull at the market and keep rates flat.
Quick overview
- A significant withdrawal of 360 Bcf from natural gas storage has kept gas futures prices relatively stable despite warm weather forecasts.
- The EIA reported a deficit of 27 Bcf compared to the 5-year average, indicating dwindling gas reserves.
- While gas prices have only increased slightly by 1.32%, the combination of reduced supply and high LNG exports may lead to higher prices soon.
- The market's response to the supply deficit has been muted, but a potential price increase is expected as the situation develops.
A massive withdrawal of 360 Bcf from natural gas storage has kept the price of gas futures flat as warm weather forecasts pull rates in the opposite direction.
The EIA (Energy Information Administration) reported large withdrawals for Friday from natural gas storage, creating a deficit of 27 Bcf when compared to the 5-year average. As supply decreases, warmer weather is expected across the lower half of the United States. Gas prices moved up just 1.32% for the day so far as both factors pull at each other and stabilize the market.
The latest EIA report showed that gas reserves are dwindling after months of excessive storage reports. This may allow the market to see higher gas prices through next week, but for now, the market price is mostly flat. The Henry Hub price is slightly higher than the market average, at $3.56 to $3.54.
Gas Deficit Shifts the Market Narrative
For much of 2025, the gas market wrung its hands over high storage levels that were well above the 5-year average. As large injections continued to pour in and demand remained low through an unusually warm year, it did not look like the reserves would be cut enough during the winter months to make much of an impact.
However, last week’s ice storms caused demand to shoot up and also slowed down production. It is only since late this week that production is back to normal and gas transportation is resuming as scheduled. During the entire cold front, LNG exports remained high for the United States, and even though warmer temperatures are setting in across much of the United States, foreign trade partners are still seeing very cold weather.
The combined weight of a diminishing reserve supply and large export numbers should shift the market price higher very soon, even with warm weather forecasts keeping prices down. The market seems little affected by the report of a supply deficit, but the impact of that should start to show by early next week.
The withdrawal numbers reported were less than expected but still very high compared to recent weeks. That lower than anticipated withdrawal may have hampered price movement slightly, but as the numbers are processed by the market, we predict the price of LNG will climb in the coming days. That is particularly likely as the price of gas has already corrected after a swift decline following the last warm weather forecasts. A slight bull market is therefore possible under these conditions.
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