Natural Gas Hovers Near 4-Month Low
Natural gas futures are down to $3 and may stay there for a while as demand falls off and supplies increase.
Quick overview
- Gas futures remain near $3, the lowest in four months, despite strong export activity and stabilizing reserves.
- Recent weather patterns have led to decreased heating demand and a significant drop in LNG rates.
- Analysts predict that natural gas prices will continue to decline due to rising production and low demand.
- The reopening of the Venezuelan natural gas market is expected to further increase supply in the Western Hemisphere.
On Friday, gas futures stayed close to the $3 level, which is the lowest point for U.S. gas futures in four months despite strong export movement and stabilizing reserve levels.
Gas reserves are no longer extremely high like they were throughout much of 2025. The massive cold front that swept throughout the United States in January depleted much of the excess supply and caused the gas prices to spike with record demand for heating. This week, the LNG rate has slowed significantly and has been hanging close to $3.
On Friday, U.S. gas futures ticked upward slightly after Thursday’s decline, increasing by 0.49% and hitting a price of $3.01 per MMBtu. Withdrawals from last week of 144 bcf was below the previous year’s 183 bcf. The price of natural gas is expected to remain close to the $3 level for now.
Gas Futures Remain Trapped
LNG rates are being pulled right now between exceptional export flows and warmer than normal temperatures. Weather forecasts call for mild temperatures that should last at least through the start of March. They could remain warmer after that, of course, but that is as far as solid forecasts can be given. Investors should expect the price of gas to drop even further by next week when new forecasts hit.
Output is on the rise throughout the U.S. and production levels are expected to increase through the spring, especially as new plants and new production lines open up. Stocks of natural gas are about 6% below normal levels, but that deficit should not last for long. By March, analysts say, the supply levels will be normal again.
Heating demand will likely stay low thanks to warmer temperatures, and those exports that are helping keep the price elevated may slow down as well. With new plants opening up around the world and warmer temperatures spreading to other countries outside the U.S., demand for exported LNG will likely decline in the coming months.
Reports from the EIA on storage levels have created a bearish outlook for the market. Investors expect the price to drop significantly through March after falling sharply already from January’s highs. The natural gas market is headed toward incredible lows in the coming months, as all indicators point to excessive supply and diminishing demand.
Recovery from the $3 level seems unlikely when Venezuela market is factored in. Now that the Venezuelan natural gas market is opening up again, supplies for the Western Hemisphere will be abundant at a time when demand is incredibly low.
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