2025 Natural Gas Picture Sees Storage, LNG, and Production Take Focus

The natural gas market in 2024 experienced significant volatility, with a mild winter that led to oversupplied storage, resulting in crashing prices and production curtailments. Despite strong summer power burn, LNG growth faced delays and the U.S. saw record net imports from Canada, resulting in over 3.97 Tcf of gas in storage exiting the summer. As we go further into 2025, the market's path remains uncertain, but several key trends are expected to shape its trajectory. The latest in our 2025 Energy Outlook Insight series, this Insight takes a look at the evolving storage picture, timing of new LNG projects, and the pace of production growth, all of which could play a pivotal role in determining whether the market stabilizes this year or continues to face pressure.

Winter Storage Exit

Weather continues to play a critical role in shaping the natural gas market. The remainder of the winter season will be key in determining storage levels heading into summer, which in turn could influence Henry Hub prices for the remainder of the year. January 2025 has been dubbed potentially the coldest January since 2011. If this colder-than-expected winter continues, it could help the market enter the summer with more balanced storage levels. This, coupled with growing LNG demand and stagnant production growth, could support Henry Hub prices throughout 2025, or until production can catch up with demand.

LNG

Though new LNG facilities experienced setbacks in 2024, the beginning of 2025 has seen a surge in activity, with the U.S. reaching new LNG feedgas delivery records. This is largely attributed to the progress at Plaquemines LNG, where six trains have now received FERC approval. Four of these trains received approval following Venture Global's announcement of first production on December 14, 2024. As of this week, feedgas deliveries eclipsed 1 Bcf/d at the facility. Looking ahead to the rest of 2025, BTU Analytics will be closely monitoring the commissioning process at Plaquemines LNG and whether the ramp-up of new trains continues as planned. And while there have been no new record flows at Corpus Christi LNG since its first LNG production announcement in late December, BTU Analytics is also closely tracking developments there, as the first train is expected to be substantially complete by the end of 1Q25.

Production Response

Despite the increased demand from winter heating and new LNG facilities, the balance of the U.S. gas market may ultimately hinge on how producers respond to Henry Hub pricing. Given the current strength in the forward market, producers may be incentivized to bring back curtailed volumes and bring on new production faster than the market can absorb. Too much production too soon could result in yet another round of low prices and curtailments. However, producers continue to express a commitment to capital discipline, which could delay a ramp in activity until prices stabilize at higher levels. In that scenario, the U.S. market could be left significantly undersupplied, leading to further support for Henry Hub entering 2026.

Looking Forward

As we continue into 2025, the natural gas market will be responsive to a variety of key factors. Among these, BTU Analytics anticipates the market will be primarily influenced by the storage picture entering the summer, the timing of new LNG production, and the response of U.S. producers. Other matters to consider going into 2025 include the potential impact to imports and exports based on the newly proposed tariffs, gas-to-coal switching, and U.S. LNG's response to Europe's need to restock their lower-than-normal inventories. These variables will be critical to watch as the year progresses towards 2026.

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