Winter Recap: Volatile Cold Temperatures Spike Demand

Over the past winter, the natural gas market saw heavy demand due to volatile colder than normal temperatures across North America as well as in Europe.

Spring Storage Rebound Amid Record LNG Exports

Going into spring, the big question a lot of analysts had in mind was if storage would be able to rebound from the cold winter as LNG export volumes increased on a monthly basis. In May 2025, record volumes of 14.7 bcf / day were hit. For reference, exports averaged 12 bcf / day in 2024. There was little geopolitical impact on natural gas futures, and the marketplace focused on storage injections. Between May and June of 2025, very strong storage injections in triple digits were recorded, bringing storage volumes above the 5-year average. Mild spring temperatures across a majority of the lower 48 helped keep power burn demand low, and that also helped in the tug and pull game of generation demand, and storage injections. As of May 30, domestic storage inventories totaled 2,598 bcf. This number is 10% of levels one year ago, and 5% above the 5-year average. Based on production numbers from the month of May, storage volumes are expected to be at 3,950 bcf by the end of the injection season this year. This volume is slightly above the average end of injection volume of 3,800 bcf.

Market Reactions to Regulatory & Economic News

The market has been reacting to a lot of news coming out of Washington on the regulatory front. Over the last year, the market has gradually increased over time, and when shoulder month futures would trade down, we have not seen winter futures trade in tandem.

Between March 2025 and May 2025, we saw the market hit two peaks and two valleys trading within an 80-cent band. In March 2025, the EPA announced significant deregulation initiatives, a total of 31 historic actions surrounding natural gas and power plants in the US. The forward market began to drop off with the idea that production could increase. Then came the announcement of the so-called “tariff war” and the marketplace began to see serious volatility going both ways as expected demand and economic worries took over the tea leaves.

Production Trends and Rising Rig Count

While the forward market has held below the peaks seen in March 2025, there is a lot of uncertainty surrounding the upcoming summer demand season, and production which was mostly flat around 100 rigs from March through May 2025. In May 2025, the US rig count for natural gas rigs began to rise, and as of May 30, the rig count rose to 109. Most recently, the US rig count has risen to 114 as reported on June 6. While the increase in rigs is a promising sign that producers are looking to take advantage of elevated gas future pricing, the upcoming seasonal demand for power burn could take up a majority of the increased production.

Power Demand from Data Centers

AI Data Center power demand is growing exponentially across the globe, and here in the US. There are approximately 1,136 hyperscale data centers globally, and the US accounts for roughly 54% of that number. With increasing data center demand hitting the grid, production is going to need to keep pace in order to maintain supply. Both LNG and data center demand will be at all-time highs this coming summer, and the traders of natural gas will be looking closely at weekly storage reports, as well as weather forecasting.

Hurricane Season Outlook & Market Risks

A busy hurricane season is also expected with NOAA announcing an expected range of 13 to 19 storms, 6 to 10 named hurricanes, and 3 to 5 major hurricanes. Natural Gas forwards are currently low considering the market fundamentals, and there is quite an upside when looking at upside / downside risk.

Looking Ahead

In the next market update, we will see the impacts of the initial hurricane season and review storage injection performance throughout the summer season.