In 2024, the U.S. natural gas market showcased its resilience and adaptability amidst evolving production dynamics, rising LNG exports, and global geopolitical pressures. As we turn toward 2025, the focus sharpens on pricing trends, supply-demand shifts, and the pivotal role of U.S. natural gas in international energy markets.
Throughout 2024, natural gas prices faced consistent downward pressure due to favourable weather and elevated storage levels. The Henry Hub spot price lingered just above $2.00 per MMBtu in November, with storage 6% above the five-year average entering the winter. A cold snap in late November and early December nudged prices upward, with projections of $3.00 per MMBtu through the heating season. By the end of March 2025, storage levels are expected to remain robust, potentially softening the impact of any early winter volatility.
U.S. natural gas production in late 2024 averaged a solid 103 Bcf/d, with projections for steady output through the first quarter of 2025. Growth in prolific regions such as the Permian and Haynesville plays continues to underpin this stability. On the LNG front, export capacity is set for significant expansion, with facilities like Plaquemines LNG and Corpus Christi Stage 3 expected to bolster 2025 shipments by 15%, taking total U.S. LNG exports to approximately 14 Bcf/d.
European demand remains a cornerstone of U.S. LNG exports. Despite European efforts to reduce dependency on Russian energy, competitive pricing has driven increased LNG imports, with the EU sourcing 20% of its LNG from Russia in 2024. The Russia-Ukraine conflict adds a layer of complexity, especially with the imminent expiration of their gas transit agreement. Any disruptions could tighten European supplies, driving demand for alternative sources, including U.S. LNG.
Domestically, natural gas continues to play a vital role in power generation. U.S. electricity demand is forecast to reach record highs, with natural gas projected to account for 40–43% of the generation mix, despite the rising adoption of renewables. Industrial and residential consumption is also expected to remain stable, reaffirming natural gas’s integral role in supporting energy reliability.
Geopolitical risks and policy decisions could influence market sentiment in 2025. The Biden administration’s cautious stance on approving new LNG export projects highlights environmental and economic concerns, potentially slowing future capacity growth. Simultaneously, the uncertain outlook for the Russia-Ukraine gas transit route could inject volatility into global markets.
As traders position for 2025, Henry Hub prices are forecast to average just under $3.00 per MMBtu. Expanding LNG exports and stable production are expected to underpin moderate bullish momentum, with technical resistance levels pointing to further upside potential. While the market reflects a solid balance, participants should monitor European developments, U.S. policy shifts, and potential delays in export infrastructure as key factors shaping price trajectories.
The U.S. natural gas sector remains a cornerstone of global energy, driven by its robust production capabilities, expanding export infrastructure, and essential role in powering domestic and international markets.
Touchstone Exploration Inc (LON:TXP) is a Canadian-based, international upstream oil and gas company currently active in the Republic of Trinidad and Tobago. Primera Oil and Gas is the Trinidadian subsidiary of Touchstone.
