NGI’s Hub & Flow How Are Natural Gas Markets Faring in the Kick-Off to 2025? Storage Shrinking, Demand Surging & Prices Elevated
Jan 24, 2025
Chilly winter weather has led to a surge in natural gas demand, pushing prices higher than the previous year. Analysts discuss how shrinking storage surpluses and production disruptions, like wellhead freeze-offs, shape the market's future. Increased LNG demand is expected to create further shifts, while the dynamics between Canadian and U.S. prices reveal cautious producer strategies. The potential impact of new tariffs and North American exports to Mexico adds another layer of complexity to this volatile landscape.
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January Freeze Impacts
- The January 2025 freeze significantly impacted natural gas markets, causing price spikes and likely shifting storage from surplus to deficit.
- High LNG demand combined with the freeze-offs created a tighter supply-demand balance than anticipated.
Future Storage Concerns
- Continued high LNG demand and the possibility of a cold February could further deplete storage levels.
- The market is now concerned about starting the next heating season with a deficit.
Price Implications
- Low storage levels at the end of winter, combined with potentially high summer demand, could limit storage injections.
- This could lead to higher prices throughout the year, especially if the following winter is also cold.