Natural gas price surges past $4 as traders eye tight inventories, cold snap, and EIA build
Natural gas prices rise on tighter inventories, cold U.S. weather forecasts, and EIA report focus
Natural gas futures surged past the $4 mark on Thursday as traders balanced bearish short-term inventory projections with tightening supply and forecasts for colder-than-usual April weather across the eastern United States. The May Nymex contract climbed to $4.119 by midday GMT, gaining 1.58%, following Wednesday's close above key technical support at $3.852.
This week’s rally has been driven by colder weather projections from April 7–11, expected to boost heating demand. Electricity consumption is also up, with the Edison Electric Institute reporting a 0.9% year-over-year increase in U.S. electricity output for the week ending March 22. These demand signals arrive just ahead of the latest U.S. Energy Information Administration (EIA) report, which is expected to show a build of 25–29 Bcf—well above the five-year average draw of 13 Bcf.
Natural gas price dynamics (February 2025 - March 2025) Source: TradingView.
Inventory, supply trends support long-term bullish bias
Despite the anticipated injection, U.S. natural gas inventories remain constrained. Current storage levels stand at 1,744 Bcf—557 Bcf below last year and 122 Bcf under the five-year average. BloombergNEF forecasts gas inventories will run 10% below the five-year average by summer, reinforcing a structurally bullish outlook, especially with U.S. LNG exports projected to rise under President Trump’s new policy lifting restrictions on LNG infrastructure expansion.
Dry gas production remains strong at 105 Bcf/day (+2.9% y/y), but domestic demand is down 5.2% year-over-year. LNG flows dipped 9.6% week-over-week to 14.2 Bcf/day, and rig counts remain historically low at 103, well below the 166 high in 2022.
Global pressures mount as Europe confronts storage uncertainty
Across the Atlantic, European natural gas futures dropped to €39/MWh—the lowest in nearly a month—as warmer weather reduced heating demand. Meanwhile, new U.S. tariffs of 20% on EU imports triggered fresh concerns about rising costs and supply chain stress. Norway’s Nyhamna gas plant began summer maintenance, adding a potential short-term strain to regional supply.
As previously noted, the tightening storage narrative and elevated heating demand were poised to lift natural gas above $4 if bullish catalysts aligned. With the EIA storage data expected to show an unusually high build, market participants remain focused on structural shortages and long-term LNG export trends.
