US natural gas futures soared on Monday, climbing nearly 8% as record-breaking flows to liquefied natural gas (LNG) export terminals and stronger-than-expected demand forecasts fuelled a market rally. The surge comes amid growing European reliance on US LNG, particularly after Germany dismissed speculation of renewed Russian pipeline supplies via the damaged Nord Stream 2.
Germany’s economy ministry reaffirmed its commitment to energy independence from Moscow, reinforcing expectations that Europe will continue to import vast quantities of US LNG. The statement followed reports that a close ally of Russian President Vladimir Putin was lobbying Washington to revive the $11 billion Nord Stream 2 project.
April gas futures on the New York Mercantile Exchange jumped 7.5%, settling at $4.122 per million British thermal units (mmBtu). This marks a sharp rebound after prices hit their lowest level since mid-February on Friday. The price recovery is particularly notable given robust US gas production and forecasts for mild weather through mid-March, which could reduce the amount of gas utilities withdraw from storage.
Despite the anticipated lower draw on reserves, extreme cold earlier in the year had already led to record withdrawals, leaving stockpiles around 12% below their five-year average. Last week’s 9% price decline saw speculators trim their net long positions in futures and options for a second consecutive time in 12 weeks, as per the US Commodity Futures Trading Commission’s latest Commitments of Traders report.
Production remains at all-time highs, with financial firm LSEG reporting an average gas output of 105.8 billion cubic feet per day (bcfd) in the Lower 48 states so far in March, surpassing February’s record of 104.7 bcfd. Meteorologists predict above-normal temperatures across much of the US through March 18, leading LSEG to forecast a dip in total gas demand, including exports, from 119.3 bcfd this week to 114.7 bcfd next week. However, these projections remain higher than previous estimates.
LNG exports continue to break records, with gas deliveries to the eight major US export facilities reaching 15.8 bcfd in March, up from February’s record 15.6 bcfd. The increase is driven by new units coming online at Venture Global’s 3.2-bcfd Plaquemines LNG export plant in Louisiana. The US solidified its position as the world’s largest LNG supplier in 2023, surpassing Australia and Qatar, as heightened global demand—exacerbated by supply disruptions and sanctions following Russia’s 2022 invasion of Ukraine—bolstered American exports.
Internationally, natural gas prices remain elevated, with the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan Korea Marker (JKM) in Asia both trading around $14 per mmBtu.
The US natural gas market remains a focal point for global energy security, with surging exports and robust production supporting its dominant position in the LNG trade.
Diversified Energy Company plc (LON:DEC) is an independent energy company engaged in the production, marketing, transportation and retirement of primarily natural gas and natural gas liquids related to its U.S. onshore upstream and midstream assets.
