HomeNewsU.S. natgas prices hit fresh 26-month high on Canada tariffs worries, record LNG flows

U.S. natgas prices hit fresh 26-month high on Canada tariffs worries, record LNG flows

3/5/2025
  • S. gas output on track to hit record high in March
  • S. LNG export feedgas on track to match February record high
  • Oil-to-gas ratio falls to lowest since December 2022

U.S. natural gas futures edged up to a fresh 26-month high on Wednesday on record flows to liquefied natural gas export (LNG) plants and forecasts for higher demand this week than previously expected.

Traders said prices also gained support on worries gas exports from Canada to the U.S. could decline due to U.S. President Donald Trump's tariffs on Canada and Mexico that took effect on Tuesday.

Front-month gas futures for April delivery on the New York Mercantile Exchange rose 3.3 cents, or 0.8%, to $4.383 per million British thermal units (MMBtu) at 8:22 a.m. EST (1322 GMT), putting the contract on track for its highest close since December 2022 for a second day in a row.

Prices rose despite near-record output and forecasts for less demand next week than previously expected and mild weather through late-March, which should allow utilities to pull less gas out of storage in coming weeks.

Extreme cold weather earlier this year, however, has already forced energy firms to pull massive amounts of gas out of storage, including record amounts in January, cutting stockpiles to around 12% below the five-year (2020–2024) normal.

A 15% increase in gas prices so far this week coupled with a 14% drop in oil futures over the past seven weeks cut the oil-to-gas ratio, or the level at which oil trades compared with gas, to 16 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. Average gas output in the Lower 48 U.S. states rose to 105.5 Bft3d so far in March, up from a record 104.7 Bft3d in February, according to LSEG data.

On a daily basis, output was on track to decline by 2.2 Bft3d over the past five days to a preliminary one-week low of 104.7 Bft3d on Wednesday, down from a three-week high of 106.5 Bft3d on February 28. That compares with an all-time daily high of 106.7 Bft3d  on February 6.

In the import market, the U.S. was on track to pull in around 8.2 Bft3d of gas from Canada on Wednesday, down from 8.3 Bft3d on Tuesday and an average of 9.8 Bft3d during the 11 days (February 21–March 3) before the U.S. imposed tariffs on Canada and Mexico on March 4. That compares with an average of 8.6 Bft3d of Canadian gas exports to the U.S. in 2024 and 7.6 Bft3d over the prior five years (2019–2023).

Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through March 20.

With milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 119.4 Bft3d this week to 111.2 Bft3d next week. The forecast for this week was higher than LSEG's outlook on Tuesday, while its forecast for next week was lower.

The amount of gas flowing to the eight big U.S. LNG export plants held at an average of 15.6 Bft3d so far in March, the same as February's record high, as new units at Venture Global's 3.2-Bft3d Plaquemines LNG export plant under construction in Louisiana enter service.

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