U.S. natural gas futures have soared to their highest levels in over two years, driven by severe winter conditions that have ramped up demand and constrained supply. With gas wells freezing across key production regions, output has dipped, while record-breaking liquefied natural gas (LNG) exports are tightening the market further. This surge marks a sustained rally, pushing gas prices into technically overbought territory and fueling a sharp rise in stock values for major gas producers.
March delivery gas futures on the New York Mercantile Exchange surged 6.8% on Wednesday, settling at $4.280 per million British thermal units (MMBtu)—their highest close since December 2022. This marks the seventh consecutive day of gains, a feat not seen since July 2021. The rally, which has driven gas prices up 29% in just a week, comes as cold weather intensifies demand for heating while also curbing production due to freeze-offs in key supply regions.
The oil-to-gas price ratio has contracted sharply due to this gas rally and declining oil prices, dropping to 17-to-1, its lowest level since December 2022. Historically, crude has averaged 20 times the price of gas in 2025, compared to 33 times in 2024 and a five-year average of 21 times between 2019 and 2023. This shift signals changing dynamics in the energy market, making natural gas a more competitive alternative to oil in terms of pricing.
On the supply side, production had rebounded slightly in early February, with Lower 48 states’ gas output averaging 105.0 billion cubic feet per day (Bcf/d), up from 102.7 Bcf/d in January. However, with Arctic air gripping key producing regions, daily output has slumped by 6.7 Bcf/d over the past two weeks, hitting a four-week low of 100.1 Bcf/d. This sharp decline underscores the vulnerability of gas production to extreme weather, as freeze-offs continue to impact well operations and pipeline flows.
Despite these supply constraints, LNG exports have surged to record levels, tightening the domestic market further. LNG feedgas flows have averaged 15.4 Bcf/d in February, up from 14.6 Bcf/d in January, surpassing the previous monthly record of 14.7 Bcf/d set in December 2023. Daily exports hit an all-time high of 16.2 Bcf/d on Tuesday, exceeding the prior record of 16.0 Bcf/d set just a day earlier. The rapid expansion of U.S. LNG capacity is playing a pivotal role in sustaining demand, with Venture Global’s Plaquemines LNG plant in Louisiana ramping up to new highs of 1.6 Bcf/d.
Weather forecasts suggest colder-than-average temperatures will persist across much of the U.S. through February 22, supporting strong heating demand before moderating toward seasonal norms in late February and early March. As conditions warm, gas demand—including exports—is expected to decline from 146.8 Bcf/d this week to 129.2 Bcf/d next week.
Meanwhile, unplanned disruptions at key LNG facilities have added to market uncertainty. Cameron LNG’s export plant in Louisiana is experiencing a notable decline in feedgas flows, dropping to a two-month low of 1.6 Bcf/d on Wednesday from 2.4 Bcf/d the previous day. While severe weather swept through Louisiana overnight, potential storm-related impacts on the facility remain unclear.
The confluence of extreme cold, declining production, and record-high LNG exports is creating a tight supply-demand balance that continues to drive natural gas prices higher. With volatile weather patterns and expanding LNG capacity, investors are closely monitoring the market for further upside potential.
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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.
