Natural Gas Market Reacts to Inventory Build and Record LNG Exports

U.S. natural gas futures saw a modest decline to $4.13/MMBtu after the Energy Information Administration (EIA) reported a larger-than-expected inventory build for the week ending March 14. U.S. utilities added 9 billion cubic feet (Bcf) of natural gas to storage, significantly surpassing the anticipated 3 Bcf. This marked the first increase in stocks since November 2024, offering some relief by narrowing the storage deficit.

Although this inventory build was larger than expected, the price drop was not overly significant, reflecting the broader tightness in the market. Natural gas stocks are still 26.8% lower than they were a year ago and 10% below the five-year average, which continues to create upward pressure on prices. The ongoing inventory shortfall remains a key concern for the market despite the recent build.

In addition to inventory trends, U.S. liquefied natural gas (LNG) exports reached a new high of 15.7 billion cubic feet per day (bcfd) in March, setting a record. This surge was driven by the expanded operations at the Plaquemines LNG facility, operated by Venture Global. As global demand for LNG remains strong, the U.S. is increasingly positioned as a major player in the international energy market, which helps to support natural gas prices.

Looking ahead, the weather forecast suggests temperatures will stay near seasonal averages through early April..

On the supply side, production in the Lower 48 states has continued to increase, reaching a record 105.7 bcfd in March, surpassing the previous record set in February at 105.1 bcfd. This boost in production signals a healthy supply pipeline, which may help alleviate some of the strain on storage levels.

In conclusion, while natural gas futures experienced a slight dip due to the unexpected inventory build, the market remains resilient with strong production and record LNG exports. The combination of tight storage levels, strong demand, and robust production continues to influence price movements. As we move into the spring season, the natural gas market will need to closely monitor storage levels and weather patterns to determine the trajectory of future price fluctuations.