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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Quick takeaways
- The January freeze significantly impacted natural gas prices by increasing heating demand, leading to wellhead freeze-offs and supply interruptions.
- Record LNG demand during cold weather highlighted supply challenges, as contrasting market conditions emerged between U.S. and Canadian natural gas production.
Deep dives
Impact of January Freeze on Natural Gas Prices
The January freeze had a significant effect on natural gas prices, with cash prices temporarily soaring due to increased heating demand. Cold temperatures led to wellhead freeze-offs, which interrupted production and further tightened supply levels. As a result, analysts warned that the existing surplus in storage could swiftly shift to a deficit relative to the five-year average, potentially concluding the heating season with low inventory levels. The volatility in prices was underscored by extreme fluctuations in the Northeast, where cash prices approached $100 during peak demand periods.
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