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The U.S. Energy Department's latest inventory report showed a higher-than-expected increase in natural gas supplies. Following the year’s first build, futures ended the week down.
Notwithstanding the weekly dip, natural gas prices remain resilient, driven by limited production growth and strong global demand. Trading around $4 after hitting its highest level since December 2022 earlier this month, the market remains firm. Given this backdrop, investors may focus on stocks such as Antero Resources AR, Coterra Energy CTRA and Gulfport Energy GPOR.
The First Natural Gas Injection of 2025
Stockpiles held in underground storage in the lower 48 states rose by 9 billion cubic feet (Bcf) for the week ended March 14, above analysts’ guidance of a 3 Bcf addition. The increase compared with the five-year (2020-2024) average net decline of 31 Bcf and last year’s injection of 5 Bcf for the reported week.
The first weekly build of 2025 put total natural gas stocks at 1,707 Bcf, 624 Bcf (26.8%) below the 2024 level, and 190 Bcf (10%) lower than the five-year average.
The total supply of natural gas averaged 110.6 Bcf per day, down 0.1 Bcf per day on a weekly basis due to lower shipments from Canada, partly offset by higher dry production.
Meanwhile, daily consumption fell to 104.3 Bcf from 110.1 Bcf in the previous week, mainly reflecting lower residential/commercial usage due to warm weather conditions across most of the country.
Prices Fall, But Supply Constraints Keep Market Tight
Natural gas prices fell last week following a larger-than-expected inventory injection. April futures closed at $3.98 on the New York Mercantile Exchange, marking a 3% decrease.
Natural gas prices dipped last week after a larger-than-anticipated inventory build, with April futures settling at $3.98 on the New York Mercantile Exchange — a 3% decline.
Despite this pullback, prices remain elevated, having recently hit a two-year high of $4.491. A mix of cold weather, supply disruptions, and global demand has kept the market strong. The U.S. and Europe both experienced record storage withdrawals this winter, tightening supply conditions and supporting higher price levels.
In 2024, the natural gas market faced significant constraints due to extreme winter conditions and sluggish production growth. Multiple Arctic cold snaps in the United States drove up heating demand while causing freeze-offs in key production regions like Appalachia and the Permian, reducing output. By late February 2025, working gas storage had dropped 5% below the five-year average, further tightening supply.
Europe’s energy crisis has intensified with the Jan. 1, 2025, shutdown of Russian gas transit through Ukraine, leaving the continent increasingly dependent on LNG imports, especially from the United States. As the world’s top LNG supplier, the United States is exporting a record 16 Bcf per day, with European and Asian buyers competing for cargoes. This steady export demand is straining domestic supply, reinforcing upward pressure on prices despite temporary pullbacks.