Natural Gas Edges Up as Forecasts See Mild Weather for Northern Markets

The natural gas market in early April 2025 is caught in a delicate balancing act. Prices have dipped in the short term due to mild weather forecasts for northern U.S. markets, yet structural factors like record U.S. LNG exports, critically low global storage levels, and geopolitical trade tensions suggest upward momentum for prices over the coming months.

Price Volatility Amid Shifting Demand
Henry Hub futures fell to $3.47/MMBtu on April 10—their lowest since early 2024—as warmer-than-expected weather reduced heating demand in key northern markets. However, this decline masks a broader trend: March 2025 futures averaged $4.10/MMBtu, a 9.7% increase over February and more than double the same period in 2024. The U.S. Energy Information Administration (EIA) projects an annual average of $4.30/MMBtu for 2025, underscoring medium-term bullishness.

Exports and Storage: The Supply-Side Story
Record U.S. LNG exports are a key driver of price stability. On April 9, U.S. LNG feedgas deliveries hit a daily record of 17.3 Bcf/day, fueled by new infrastructure at the Plaquemines and Corpus Christi facilities. These exports not only support domestic prices but also global markets, where Europe’s 30% storage level—a multi-year low for this time of year—has created urgent demand for replenishment.

Meanwhile, U.S. storage levels remain strained. As of April 4, inventories stood at 1,830 Bcf, 40 Bcf below the five-year average and 450 Bcf below 2024 levels. With injection season underway, robust injections could ease prices temporarily, but analysts warn that below-average storage poses a long-term risk.

Weather: A Double-Edged Sword
The early April cold spell in the northern U.S. boosted residential/commercial gas demand by 24.4% week-on-week and 14.8% year-over-year, temporarily lifting prices. However, NOAA forecasts above-normal temperatures for most of the U.S. by mid-April, with only the Pacific Northwest and New England remaining near-normal. This transition to mild weather will likely reduce heating demand, easing pressure on prices in the short term.

In Europe, delayed winter weather extended heating demand into March, but milder April conditions are enabling storage refills. Despite this, Europe’s reliance on U.S. LNG to rebuild inventories—~30% full as of early April—ensures global demand remains elevated.

Production and Trade Risks
While U.S. dry gas production rose 4% year-over-year to 105.8 Bcf/day, the rig count fell to 96—a 12.7% YoY decline—raising concerns about future supply growth. Geopolitical risks also linger: China’s 84% tariff on U.S. LPG imports has forced exporters to redirect shipments to Europe and Asia, complicating global supply chains and amplifying price volatility.

Investment Outlook: Navigating the Crosscurrents
The market’s near-term trajectory hinges on storage injections and weather. If U.S. injections remain robust (March averaged 33 Bcf/week), prices could stagnate or dip further. However, the EIA’s $4.30/MMBtu annual average forecast reflects structural bullishness: Europe’s storage crisis, Asia’s shifting demand, and U.S. export capacity growth all favor higher prices by year-end.

Investors should prioritize long-dated contracts or equities in LNG exporters, which benefit from sustained global demand. Short-term traders might capitalize on seasonal dips but should remain wary of geopolitical shocks or supply disruptions.

Conclusion
Natural gas prices in April 2025 are a microcosm of the market’s duality: weather-driven volatility contrasts with fundamental bullishness rooted in structural deficits and geopolitical shifts. With Europe’s storage at crisis lows and U.S. production constrained by rig declines, the path to $4.30/MMBtu seems inevitable. Investors who blend short-term caution with medium-term conviction—tracking storage data and LNG export trends—will best navigate this complex landscape.

As the spring injection season unfolds, one truth remains clear: the gas market’s heartbeat is now tied to storage levels and the weather’s whims.