HomeNewsU.S. Natural Gas Prices Surge 7% to 25-Month High as Freeze Cuts Output

U.S. Natural Gas Prices Surge 7% to 25-Month High as Freeze Cuts Output

2/19/2025

(Reuters) — U.S. natural gas futures jumped about 7% to a 25-month high on Wednesday as extreme cold in some parts of the country boosted demand for the fuel for heating and cut output by freezing oil and gas wells.

Traders said prices also gained support on record gas flows to liquefied natural gas export plants.

Front-month gas futures for March delivery on the New York Mercantile Exchange rose 27.3 cents, or 6.8%, to settle at $4.280 per million British thermal units (MMBtu), their highest close since December 2022. That put the contract up for a seventh day in a row for the first time since July 2021 and kept it in technically overbought territory for a second straight day for the first time since November 2024.

With gas futures up 29% over the past seven days, stock prices of several of the biggest U.S. gas producers soared.

Recent increases in gas prices coupled with a decline in oil futures cut the oil-to-gas ratio, or the level at which oil trades compared with gas, to 17 to 1, the lowest since December 2022. On an energy equivalent basis, oil should only trade six times over gas.

So far in 2025, crude prices have averaged about 20 times over gas. That compares with 33 times over gas in 2024 and 21 times over gas during the prior five years (2019-2023).

Supply and Demand

Financial company LSEG said average gas output in the Lower 48 U.S. states rose to 105.0 billion cubic feet per day (Bcf/d) so far in February, up from 102.7 Bcf/d in January when freezing oil and gas wells and pipes, known as freeze-offs, cut production. That compares with a monthly record of 104.6 Bcf/d in December 2023.

But with the return of extreme cold that is again freezing wells in some parts of the country, daily output was on track to drop by around 6.7 Bcf/d over the last 13 days to a preliminary four-week low of 100.1 Bcf/d on Wednesday. That compares with a daily record of 106.7 Bcf/d on February 6. Analysts noted preliminary data is often revised later in the day.

Meteorologists projected weather in the Lower 48 states would remain colder than normal through February 22 before switching to mostly near-normal levels from February 23 to March 6.

With milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 146.8 Bcf/d this week to 129.2 Bcf/d next week. The forecasts for this week were higher than LSEG's outlook on Tuesday, while the forecasts for next week were lower.

The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 15.4 Bcf/d so far in February, up from 14.6 Bcf/d in January. That compares with a monthly record high of 14.7 Bcf/d in December 2023.

On a daily basis, LNG feedgas hit a record 16.2 Bcf/d on Tuesday, topping the prior all-time daily high of 16.0 Bcf/d on Monday.

The LNG daily feedgas record came as flows to Venture Global's 2.6-Bcf/d Plaquemines LNG export plant under construction in Louisiana were on track to hit a fresh high of 1.6 Bcf/d on Wednesday.

In other LNG news, LSEG noted flows to Cameron LNG's 2.0-Bcf/d export plant in Louisiana were on track to drop to a preliminary two-month low of 1.6 Bcf/d on Wednesday, down from 2.4 Bcf/d on Tuesday and an average of 2.3 Bcf/d over the prior seven days.

Traders noted there were storms in Louisiana overnight but did not know of any possible impact from the storms on the plant. Officials at Cameron LNG were not immediately available for comment.

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