Natural Gas Price Trends

According to a research note from UBS, temporary disruptions at export terminals and increased production have recently caused US natural gas prices to drop due to congestion concerns.

Despite this, UBS has a positive 12-month outlook for US natural gas, although they advise caution due to high roll costs affecting performance.

UBS anticipates that higher prices will be required in 2025 to accommodate rising export demand. As of July 12, US natural gas inventories are at 3.2 trillion cubic feet, which is 16.9% (465 billion cubic feet) above the 2019-2023 average and exceeds the five-year average.

Although this surplus is less than the 678 billion cubic feet recorded in mid-March, it remains substantial. Concerns that inventories might reach capacity limits by the injection season’s end (October) have resurfaced, causing prices to fall from above USD 3/mmbtu in mid-June to near USD 2/mmbtu in mid-July.

Hurricane Beryl caused disruptions at LNG export terminals, intensifying fears of congestion. US LNG exports dropped from 13 billion cubic feet per day (bcf/d) to below 11 bcf/d, before recovering to over 12 bcf/d.

The rebound in US natural gas production has also raised concerns. UBS retains its optimistic view for US natural gas prices over the next year, driven by new LNG export terminals and increasing pipeline exports to Mexico. However, the Golden Pass export terminal is now expected to start operations at the end of 2025, rather than the initially projected late 1H25.