USA Natural Gas Prices Experience Volatile Start in 2025

U.S. natural gas prices have experienced a volatile start of the year, supported primarily by the increased demand for heating from an extremely cold weather period coupled with increased external demand.

That’s what analysts at BMI, a unit of Fitch Solutions, stated in a BMI report sent to Rigzone by the Fitch Group on Monday, adding that LNG demand from Europe and changes in sentiment driven by policies announced by the new U.S. administration have also added to volatility in prices.

“Henry Hub front month prices averaged $3.4 per million British thermal units (MMBtu) in 2024 and continued growing over the majority of January, averaging at $3.7 per MMBtu for the first month of the year,” the BMI analysts noted in the report.

“The front month prices surpassed $4.0 per MMBtu on January 15, levels last seen in early 2023, in response to the cold snap caused by polar vortex and record snowfall along the Gulf Coast states,” they added.

“As weather improved over the second half of the month, prices started to decline falling below $3.0 per MMBtu on January 31,” they continued.

“In February, the prices experienced a sell-off driven primarily by the growing concerns regarding natural gas demand, in light of the developing trade war between the U.S., Mexico, Canada, and China and looming tariffs and retaliatory actions,” the analysts went on to state.

When asked why the U.S. natural gas price was up on Monday in an exclusive interview with Rigzone yesterday, Josh Garcia, a senior gas analyst at Energy Aspects, told Rigzone, “Henry Hub is up because weather forecasts shifted slightly colder over the weekend”.

“We now expect February will be seven percent colder than the 10-year normal in terms of Lower 48 HDDs [Heating Degree Days]. This will lead to an above-average monthly withdrawal from storage,” he added.

“The major downside risk to forwards is production, which set records above 107 billion cubic feet per day over the weekend,” Garcia went on to state.

Henry Hub Price Forecast

According to the BMI report, BMI forecasts that the Henry Hub price will average $3.4 per MMBtu in 2025, $3.8 per MMBtu across 2026 and 2027, and $4.0 per MMBtu across 2028 and 2029.

A Bloomberg Consensus, which was included in the report, projected that the Henry Hub price will average $3.4 per MMBtu this year, $3.7 per MMBtu in 2026, $3.8 per MMBtu in 2027, and $4.0 per MMBtu in 2028. This Bloomberg Consensus did not include a Henry Hub price projection for 2029.

“This quarter, we hold the view for a substantial increase in Henry Hub front month price average to $3.4 per MMBtu in 2025 from $2.4 per MMBtu in 2024,” the BMI analysts said in the report.

“This increase will be supported by [a] tightening domestic natural gas market amid stronger demand for feedstock from the LNG industry, which continues to see growing export capacity. That said, the expected recovery in production, coupled with slightly slower domestic demand growth, except for the LNG industry, will limit the near-term price increases,” they added.

“We highlight elevated risks to our Henry Hub price view, stemming from the impact of tariffs on some of the U.S. key trade partners,” the analysts continued.

“Whether they are put into effect or delayed, the potential for supply disruption or a broader macroeconomic impact of a trade war could temper gas demand globally and add geopolitical implications for energy prices,” the BMI analysts went on to state.

A research note sent to Rigzone by the JPM Commodities Research team on Friday showed that J.P. Morgan expects the U.S. Natural Gas Henry Hub price to average $3.50 per MMBtu in 2025 and $3.94 per MMBtu in 2026.

The company sees the commodity coming in at $3.55 per MMBtu in the first quarter of 2025, $3.10 per MMBtu in the second quarter, $3.55 per MMBtu in the third quarter, and $3.80 per MMBtu in the fourth quarter of this year, the note showed.

Rigzone has contacted the Trump transition team, the White House, the U.S. Department of Energy (DOE), Global Affairs Canada, Mexico’s ministry of foreign affairs, the State Council of the People’s Republic of China, the American Petroleum Institute (API), and the International Association of Oil & Gas Producers (IOGP) for comment on BMI’s report. At the time of writing, none of the above have responded to Rigzone’s request yet.

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