Natural gas markets have surged in recent weeks, propelled by a potent combination of geopolitical tensions and plunging winter temperatures. Citi analysts highlight a shifting landscape that has investors and energy stakeholders watching closely. With supply disruptions and rising demand, this rally could mark a pivotal moment for global energy dynamics.
Since mid-December 2024, global natural gas prices have seen a sharp upward trajectory. Ukraine’s suspension of Russian gas exports to several European countries on New Year’s Day added a layer of unpredictability to an already volatile market. As long as the supply disruption continues, experts anticipate elevated price levels to persist.
Citi analysts note that colder weather patterns across key regions, including the United States and Asia, are amplifying demand, further supporting the price surge. The forecast for prolonged winter chill is likely to sustain this upward momentum.
BMI Research predicts that natural gas prices will rise by 40% in 2025, reaching an average of $3.4 per million British thermal units (MMBtu), up from $2.4 in 2024. This increase reflects expanding demand from the liquefied natural gas (LNG) sector and heightened pipeline exports. Currently, U.S. Henry Hub natural gas prices, a benchmark for the industry, stand at $2.95 per MMBtu, underscoring the trend towards higher pricing.
LNG remains a key driver of this shift, with rising export capacities and robust demand from Europe and Asia positioning it as a cornerstone of the natural gas market’s future. BMI analysts emphasise the growing importance of LNG in meeting global energy needs, particularly as countries diversify supply chains and respond to geopolitical challenges.
Natural gas markets are entering a transformative phase, shaped by surging demand, supply constraints, and geopolitical influences. Investors should remain vigilant as these dynamics unfold, presenting both opportunities and risks in the year ahead.
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.
