Natural Gas Prices Plunge Amid Mild Spring, But Storm Clouds Linger

The natural gas market has entered a precarious dance of short-term relief and long-term tension. As spring weather softened demand, prices dipped in early April 2025—dropping to $3.21/MMBtu at the Henry Hub spot by mid-month. Yet beneath the surface, structural forces like surging LNG exports, storage deficits, and industrial demand keep a floor under prices. Investors must navigate this volatility with care.

The Weather Wild Card

The immediate catalyst for the price drop is clear: temperatures. Gas-weighted heating degree days in early April were 12.2% warmer than the 30-year average, with most regions—except the Pacific Northwest and New England—enjoying unseasonably mild weather. This pattern slashed weekly gas consumption by 5.4 Bcf/d by April 16, easing pressure on already strained storage inventories.

But this respite is fleeting. The NOAA forecasts suggest this warmth may not last, and winter’s memory lingers: January’s record-breaking cold drove gas demand to 93.5 Bcf/d, depleting storage to 1,846 Bcf by April 11—21% below 2024 levels and 4% below the five-year average.

The Bulls’ Case: Why Prices Won’t Stay Low

1. LNG Exports at Record Levels: LNG feedgas deliveries hit 17.3 Bcf/d on April 9, fueled by new terminals like Plaquemines LNG. These exports are eating into domestic supply, even as global buyers—especially in Asia—rely on U.S. gas amid geopolitical tensions.
2. Industrial Demand Shows No Mercy: Despite the weather, gas consumption remains 5% higher year-over-year, driven by petrochemical plants and power generators. The EIA notes this sector’s resilience could sustain prices even as residential demand wanes.
3. Storage Struggles: Injections of 57 Bcf for the week ending April 4 were a positive sign, but inventories remain precarious. A harsh winter or supply disruption could quickly reignite a storage crisis.

The Bears’ Concern: Overproduction and Policy Risks

• Drilling Slump: U.S. gas rigs fell to 96 in early April—down 12.7% from 2024. While this could curb production growth, it also hints at an industry less capable of responding to sudden demand spikes.
• Trade Tensions: U.S. tariffs and retaliatory measures have yet to disrupt LNG exports, but prolonged disputes could complicate global supply chains.

The Bottom Line: Buy the Dip?

The EIA’s Short-Term Energy Outlook projects Henry Hub prices will average $4.30/MMBtu in 2025—$2.10/MMBtu higher than 2024—and climb further to $4.85/MMBtu in 2026. This trajectory is underpinned by structural deficits: even with mild weather, gas remains a linchpin for global energy transition, industrial power, and LNG markets.

Investors should treat the April dip as a buying opportunity for long-dated futures or equities in efficient producers. However, short-term traders must brace for volatility tied to weather forecasts and storage reports. The gas market is no longer a seasonal play—it’s a geopolitical and industrial battleground.

Conclusion

While April’s price decline offers a momentary sigh of relief, the fundamentals of natural gas remain bullish. With storage 21% below 2024 levels, LNG exports near record highs, and industrial demand unshaken, the market is primed for a rebound. The EIA’s $4.30/MMBtu annual average for 2025 is a conservative estimate—especially if summer heat or geopolitical crises reignite urgency. For investors, the lesson is clear: the gas bear market is over, but the ride to $5/MMBtu and beyond will be bumpy. Buckle up.

This analysis synthesizes price data, storage dynamics, and macro trends to underscore that natural gas’s decline is a pause, not a retreat. The real storm—sustained high prices—is still on the horizon.