US Natural Gas Futures up 3% on Declining Output

Quick overview

Gas futures in the United States rose 3% on Monday to hit $2.58 per MMBtu as output fell to its lowest point in 11 weeks due to rising costs and a lack of demand.

LNG output in the United States is down but 4.1 bcfd for the last two and a half weeks. Falling demand for natural gas and rising production cuts forced output levels lower, creating a scenario where inventory levels are high and the need for LNG is low, but the price is still rising.

Natural gas rates are only slightly affected this week by rising tension in Iran, and global oil prices are up nearly 3% on major benchmarks, but domestic LNG costs are primarily rising this week due to decreased output from production plants. Those plants face higher costs in recent months as facility construction costs have skyrocketed.

Natural Gas Plant Costs up 66% over Two Years

The cost to build a natural gas production plant is much higher in 2026 than it was in 2024. The price increase for parts needed is up by nearly 66%, according to a report from BloombergNEF. Facilities are also taking longer to complete- about 23% longer than they did two years ago, say reports.

The issue is partly that there is simply more demand for these facilities. Big tech companies like Meta and Microsoft are constructing their own natural gas production facilities, cutting out the middleman for electricity supply but paying large amounts upfront. Data centers need massive amounts of electricity, and with the rapid rise of AI products and services, those centers are more important than ever. To cut costs, companies are building their own natural gas production facilities, and the demand is increasing costs for everyone and driving output down for existing facilities.

Even though natural gas rates are higher today than last week, they still remained close to their post point in 18 weeks. The rates have been pushed lower and lower for weeks as temperatures warm and inventory levels rise. The latest injection reported was 103 bcf, which came in for the week ending on April 17th. That was much higher than the market forecasted, and it is well above the five-year average of 64 bcf. Forecasts are calling for slightly cooler temperatures as the month closes out and May begins, but if that changes, then investors should expect the LNG rate to plummet again.

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Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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