US Natural Gas Prices Surge 2% Amid Record LNG Exports and Supply Crunch

The US natural gas market is experiencing a significant surge, with prices climbing 2% to a one-week high of $4.11 per million British thermal units (MMBtu). This upward trend is driven by a combination of record liquefied natural gas (LNG) exports and a sharp decline in daily output, creating a supply-demand imbalance that is pushing prices higher.

The recent price increase can be attributed to several key factors. An Arctic blast over the past week has driven up heating demand while simultaneously freezing oil and gas wells, reducing production. This has led to a decline in output by 6.7 billion cubic feet per day (bcfd) over the past 13 days, reaching a four-week low of 100.1 bcfd. Additionally, gas flows to LNG export plants have surged to record levels, averaging 15.4 bcfd in February, up from 14.6 bcfd in January. Daily LNG feedgas hit an all-time high of 16.2 bcfd on Tuesday, surpassing the previous record of 16.0 bcfd set on Monday. Furthermore, inventory data from the Energy Information Administration (EIA) showed a bigger-than-expected 196 bcf draw last week, higher than the 100 bcf decrease recorded in the previous period. These factors have contributed to the recent price increase, as supply has tightened while demand remains elevated.

Comparing these factors to historical price movements, we can see that similar market conditions have led to significant price increases in the past. For example, in December 2005, natural gas prices reached an all-time high of 15.78 USD/MMBtu, driven by a combination of high demand and low supply. Similarly, in 2008, prices peaked at 12.69 USD/MMBtu in June, as a result of increased demand and limited supply. In both cases, the price movements were driven by a combination of factors, including weather-related demand, supply disruptions, and inventory levels. The current market conditions, with elevated demand and reduced supply, are reminiscent of these historical price movements, and the recent 2% climb in prices can be seen as a continuation of this trend.

The ongoing Arctic blast and colder-than-normal temperatures across the Lower 48 states are likely to significantly influence natural gas consumption patterns and pricing trends in the coming weeks. Forecasters anticipate colder-than-normal temperatures across the Lower 48 states through February 22, keeping demand elevated. This sustained cold weather will likely lead to higher natural gas consumption as more households and businesses rely on natural gas for heating. Additionally, the reduction in production due to frozen wells will exacerbate the supply-demand imbalance. The current price of $4.11/MMBtu is already near its highest levels since December 2022, and the ongoing cold weather could push prices even higher.

Furthermore, the surge in gas flows to LNG export plants, with daily LNG feedgas hitting an all-time high of 16.2 bcfd on Tuesday, indicates that a significant portion of the available supply is being exported. This further tightens the domestic supply, contributing to higher prices. The information also mentions that "Natural gas increased 0.62 USD/MMBtu or 17.18% since the beginning of 2025," highlighting the upward trend in prices.

In summary, the ongoing Arctic blast and colder-than-normal temperatures are likely to increase natural gas consumption for heating, reduce production due to frozen wells, and tighten the supply-demand balance. These factors will likely drive up natural gas prices in the coming weeks. Investors and market participants should closely monitor these developments and adjust their strategies accordingly.