Futures prices point to a rise in US natural gas prices in 2025

Benchmark natural gas prices in the United States could be set for a rise next year, according to the Henry Hub contract futures curve.

The forward band of Henry Hub futures prices suggests that U.S. natural gas prices could average $3.20 per million British thermal units (MMBtu) next year, according to LSEG data reported by Reuters columnist Gavin Maguire. That would compare with an average price of $2.22 in the benchmark U.S. natural gas price so far this year.

Futures prices indicate that next year US natural gas prices could average 44% higher than in 2024, which, if it materializes, would be the steepest increase in US natural gas prices since 2022, Maguire notes .

Earlier this year, when prices hit multi-year lows in late winter and early spring, US natural gas producers and pipeline operators acknowledged that there was an oversupply in the market. But they believe gas will continue to be in demand domestically and internationally for decades to come.

Going forward, higher US LNG exports and US producers recalibrating natural gas production in response to multi-low prices this year could set the stage for a rebound in Henry Hub prices in 2025.

US LNG supply will play a key role in the upcoming global supply wave from 2025-2027, with the US and Qatar poised for the largest increases in LNG exports. More gas destined for LNG plants could tighten the US domestic market.

In recent years, US natural gas prices have remained relatively low – except for brief spikes during production constraints from winter freezes – despite continued growth in US LNG exports.

The key reason for this was the flexibility of US natural gas producers to act, and have acted, in response to demand and market conditions.

By Tsvetana Paraskova for Oilprice.com

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