As winter comes to a close and temperatures rise across the continental U.S., the natural gas market is shifting from withdrawal season to injection season. The winter of 2024/2025 started with an early December cold blast, and as of December 27, 2024, working gas in storage stood at 3.413 trillion cubic feet—154 billion cubic feet above the five-year average. Despite NOAA’s forecast for a warmer-than-normal winter, much of the U.S. and Europe experienced significantly colder conditions.

Winter’s Impact on Production and Pricing

The January 2025 natural gas future settled at $3.51 per MMBtu, slightly above December’s $3.43 per MMBtu. Production hit a record high of 106.8 Bcf/d on December 31, 2024. However, January’s extreme cold sent spot prices soaring to levels not seen since 2018, with Northeast city gates reaching between $20 and $50 in certain markets. Winter storm Enzo had a major impact on production, bringing record-low temperatures, snow, and ice to parts of the Gulf, including Houston, Florida, and New Orleans. This led to wellhead freezes and infrastructure disruptions, temporarily dropping production to just above 96 Bcf/d before stabilizing.

LNG Demand and Storage Concerns

LNG feedgas demand surged through January, increasing from 15.8 Bcf/d to nearly 17 Bcf/d. By late February, storage withdrawals fell below the five-year average, with storage levels at a 238 Bcf deficit. As of February 21, 2025, storage was 23% below levels from the same time in 2024 and 12% below the five-year average. Storage is expected to end the withdrawal season at around 1,600 trillion cubic feet—significantly lower than the previous year—meaning production will need to remain strong during injection season. With rising LNG demand in Asia and Europe ahead of winter 2025/2026, natural gas supply will continue to face pressure.

Key Market Drivers Moving Forward

Henry Hub prices are averaging much higher in 2025 at $3.65 per MMBtu compared to 2024’s $2.26 per MMBtu. April 2025 futures are trading above $4, well above the settlements from April 2024 and April 2023. Additionally, energy demand from AI data centers is expected to surge, increasing reliance on natural gas. This will create a push-and-pull dynamic between LNG demand and storage needs during injection season. Another record-breaking summer could further strain supply as power demand rises for air conditioning. While winter 2025 isn’t officially over, market focus is shifting toward rising temperatures and upcoming withdrawal reports. At the end of the day, all eyes remain on the weather.