Orange County, California – The natural gas market is seeing a resurgence in prices, with front-month futures rising by approximately 50% since hitting a low in February. The bullish trend for natural gas prices is expected to continue over the next 12-18 months, creating a supportive environment as the industry transitions into 2025.

The U.S. natural gas market has been facing challenges due to bearish weather conditions and significant production growth, leading to elevated storage levels above seasonal averages. This oversupply caused prices to drop, prompting producers to cut production in early March. As a result, total natural gas supply has returned to more robust levels, tightening the market and driving prices higher.

Despite the improvements in the supply picture, total supplies are still at average levels, and inventory balances remain in a surplus. While demand catalysts are expected to support higher prices in the medium term, there is still excess storage to work through, limiting short-term gains.

One of the key factors driving the bullish outlook for natural gas prices is the anticipated increase in LNG exports capacity by around 6 bcf/d through the end of 2025. This additional capacity is expected to come online in the latter stages of 2024, providing a significant boost to prices.

The weather outlook plays a pivotal role in shaping natural gas demand, with the potential for above-average demand during the summer and winter months. The transition from El Nino to La Nina is expected to bring colder-than-normal winters in the U.S., potentially impacting natural gas prices.

Short-term headwinds remain in the natural gas market, including the contango in futures prices and speculative buying that could lead to position unwinding. However, the long-term fundamental picture for natural gas prices and equities continues to improve, with potential upside expected over the next 12-24 months. A colder winter could further fuel a bull market in natural gas.