Natural gas is currently experiencing a strong bull market driven by short-term factors like weather and export growth, as well as longer-term trends such as its role as a transition fuel. While some forecasts suggest prices could stabilize or decrease slightly after 2026, others indicate continued growth through 2030. Given the current momentum and supportive fundamentals, it is likely that natural gas is in a multi-year bull run, though investors should remain mindful of potential risks such as increased supply and the energy transition.
Current Market Conditions
As of March 21, 2025, natural gas futures prices are trading above $4.0 per million British Thermal Units (MMBtu), with the Henry Hub spot price at $4.22 per MMBtu and the April 2025 NYMEX contract at $4.247 per MMBtu for the week ending March 19, 2025 EIA Natural Gas Weekly Update. This marks the highest levels in two years, driven by several factors:
Weather Impact: Earlier in the winter, colder temperatures likely increased demand for heating, pushing prices up. Recent data shows warm weather reducing heating demand, with Northeast consumption down 14% (3.1 Bcf/d) for the week ending March 19, 2025, but the seasonal effect earlier in the year seems to have contributed to the price surge EIA Natural Gas Weekly Update.
Supply and Demand Dynamics: Total supply fell 0.1% (0.1 Bcf/d) for the week, while dry production increased 0.4% (0.4 Bcf/d) to 105.9 Bcf/d. Consumption fell 7.7% (6.2 Bcf/d), with residential/commercial use down 18.8% (5.5 Bcf/d), reflecting warmer weather. However, storage levels are 190 Bcf (10%) below the five-year average at 1,707 Bcf, indicating tighter supply conditions EIA Storage Dashboard.
LNG Exports and Policy Changes: The lifting of the LNG export moratorium, initially imposed by President Biden and challenged in court by July 2024, has led to record exports. For the week ending March 19, 2025, LNG deliveries averaged 16.4 Bcf/d, up 0.6 Bcf/d from the previous week, with 26 vessels departing U.S. ports carrying 98 Bcf capacity EIA Weekly Report. This increase aligns with the start of new export facilities like Plaquemines LNG Phase 1 and Corpus Christi Stage 3 in December 2024, boosting global demand EIA Short-Term Outlook. The moratorium lift, blocked by a federal judge on July 1, 2024, and potentially accelerated under a Trump administration, has been a significant factor Reuters LNG Export News.
Natural gas ETFs have seen substantial gains year-to-date (YTD), reflecting the price rally:
ProShares Ultra Bloomberg Natural Gas ETF (BOIL): Up more than 81% YTD, this leveraged ETF (2x the daily performance of the Bloomberg Natural Gas Subindex) has benefited from the price surge, making it a standout performer ETF Database BOIL.
United States Natural Gas Fund (UNG): Gained 38.5% YTD, tracking the Henry Hub near-month futures contracts traded on the NYMEX. With $480 million in assets, it is more popular than UNL and has outperformed despite contango risks ETF Trends Natural Gas.
United States 12 Month Natural Gas Fund (UNL): Increased by 33.2% YTD, this ETF seeks to mitigate contango by holding a diversified basket of the next twelve futures contracts. However, with only $18 million in assets, it is less popular but offers a strategy to smooth out roll costs PortfoliosLab UNL vs. BOIL.
Short-Term Outlook (2025-2026)
The U.S. Energy Information Administration (EIA) provides detailed forecasts for the short term:
The Henry Hub spot price averaged $4.19 per million British thermal units (MMBtu) in February 2025, up from $4.13/MMBtu in January, and the average for the first two months was more than $0.80/MMBtu higher than forecasted in October 2024 EIA Short-Term Energy Outlook.
For 2025, the EIA expects the spot price to average almost $3.80/MMBtu, up 65 cents from their January 2025 outlook, and reach nearly $4.20/MMBtu in 2026 EIA Short-Term Energy Outlook.
U.S. marketed natural gas production is forecasted to increase by 2% in 2025, after a 1% decline in 2024, with growth in regions like the Permian, while consumption is mostly unchanged in 2024 compared to 2023, averaging 89 Bcf/d EIA Short-Term Energy Outlook.
Electricity generation is expected to increase by 2% in 2025 and 1% in 2026, with natural gas playing a significant role in supplying additional generation EIA Short-Term Energy Outlook.
Globally, the World Bank notes that natural gas demand is expected to increase by about 2% in both 2024 and 2025, driven by China and the Middle East, which could continue to support higher prices World Bank Natural Gas Market Developments. Reuters also reports that key global natural gas prices are set to keep rising into 2025 due to cold weather forecasts and inventory restocking, supporting the idea of a continuing upward trend Reuters Natural Gas Price Outlook.
Is This a Multi-Year Bull Run?
A multi-year bull run typically refers to a sustained period of rising prices, often spanning 3-5 years or more. Based on the current trends and forecasts:
Short-Term (2025-2026): Prices are expected to remain high, with a slight dip in 2025 to $3.80/MMBtu followed by an increase to $4.20/MMBtu in 2026, according to the EIA EIA Short-Term Energy Outlook. This suggests a continuation of the current bullish trend.
Medium-Term (2027-2030): Forecasts are mixed, with Deloitte predicting continued price increases to $5.40/MMBtu by 2030, while Fitch sees stabilization at $2.75/MMBtu post-2026, and McKinsey suggests stability at $2.50/MMBtu long-term Deloitte Natural Gas Forecast, Fitch Ratings Forecast, McKinsey Global Energy Perspective. This indicates some uncertainty, but the bullish case is supported by demand growth and LNG exports.
Long-Term Drivers: The role of natural gas as a transition fuel, coupled with global demand growth and LNG export dynamics, suggests that prices could remain elevated for several years. However, increased production from shale and the eventual shift to renewables could lead to price volatility or a reversal in the longer term, creating a complex picture.
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