Given the colder-than-usual temperatures in the US during January and February in recent years, the recent drop in prices might seem unexpected—especially considering how quickly storage has been depleted. In response, the US Energy Information Administration (EIA) has raised its average price forecasts for natural gas based on Henry Hub contracts for 2025 and 2026.
Meanwhile, prices have now reached the key $3 per MMBtu level, a significant support point that could slow down supply pressure. With higher price forecasts in play, this level might also mark the beginning of a potential rebound. If prices fall below this threshold, it could present a more appealing setup for entering a long position.
Lower US Natural Gas Storage in Early 2025
The EIA now expects higher average natural gas prices—$4.27 for this year and $4.60 for next—up from previous estimates of $4.19 and $4.47. The shift comes after a colder-than-usual start to the year, which drove strong demand during the heating season.
According to the agency, around 1,600 billion cubic feet were pulled from storage, about 21% above the five-year average. As of April 11, total stocks were down to 1,846 Bcf—4% below the five-year norm and 21% lower than the same time last year. If storage stays tight, it could keep upward pressure on prices.
These forecasts and data stand in stark contrast to the declining value of HenryHub’s May contracts. The drop can be attributed to weakening demand since the start of the month, with a weekly decrease of less than 7%, partly due to higher temperatures, particularly in the Midwest.
Alongside weather conditions, the market will closely monitor inventory changes in the coming months. Warehouse injections are expected to exceed multi-year averages over the next two quarters. If these plans are not met, upward pressure on raw material prices could persist.
HenryHub Contract Tests Key Support
After several weeks of declines, the supply side has pushed against the key $3 per MMBtu barrier, which is both a significant round level and a key technical point. If buyers manage to break through, the next local target will be the $3.30 per MMBtu resistance, following a previous break of the accelerated downward trend line.
If supply drops further, there could be opportunities to buy at more favorable prices in the medium to long term. In this case, the next target would be the main uptrend line, and in a worst-case scenario, prices could reach around $2.30 per MMBtu.
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