Natural gas price forecast: Prices surge as exports rise and storage tightens
Natural gas futures hit $4.4/MMBtu as U.S. LNG exports and storage deficits drive prices higher
U.S. natural gas futures climbed toward $4.4/MMBtu, marking their highest level since December 2022, driven by record LNG exports and rising demand expectations. LNG shipments reached a record 15.6 billion cubic feet per day (bcfd) in February, supported by additional capacity from Venture Global’s Plaquemines plant.
Despite forecasts for milder weather through mid-March, natural gas demand across the Lower 48 states is expected to surpass earlier projections. The 12% decline in storage levels compared to the five-year average continues to provide upward momentum for prices, reflecting the impact of earlier extreme cold conditions in the U.S.
Natural gas price forecast (Jan 2025 - Mar 2025) Source: TradingView.
Short-term outlook: Resistance levels ahead
From a technical perspective, natural gas remains within a bullish channel, with $4.56 acting as a key level. A short-term pullback to $4.32 was observed as traders took profits, but positive momentum suggests a continued uptrend. If support at $3.98 holds, further gains could see prices targeting $4.76 and $4.96, aligning with the upper boundary of the bullish channel.
However, analysts caution that seasonal trends could soon weaken demand, as warmer spring temperatures typically lead to lower consumption. While production hit a record 104.7 bcfd in February, the market remains focused on Canada's reduced exports to the U.S. due to newly imposed tariffs, which could tighten supplies further.
Will natural gas sustain its rally?
While the current trend points toward further upside potential, traders remain cautious about the seasonal shift in demand. A break above $4.50 could trigger a rally toward $4.76 and $5.00, while a drop below $3.98 could signal a return to a more bearish trend.
With LNG exports remaining strong and stockpiles below historical averages, natural gas prices are likely to stay elevated in the short term as we discussed previously. However, a decline in heating demand over the next few months could lead to a pullback, making upcoming inventory reports and export trends crucial for market direction.
