In January, two intense winter storms swept across the U.S., bringing record-breaking freezing temperatures to the southern states and some of the heaviest snowfall in some areas since 1881.

At the start of 2025, U.S. natural gas storage levels were above the five-year average. However, the surge in demand from these storms, coupled with ongoing production cuts, has now pushed storage levels below the five-year average.

Domestic Demand

The U.S. Energy Information Administration (EIA) reported a massive demand spike between January 15th and 22nd, with demand averaging 157.1 billion cubic feet (Bcf) per day.  The residential and commercial sector saw a 10 percent increase from the week prior as millions tried to keep their homes and businesses warm.

Although temperatures have since warmed across most of the country, the EIA notes that natural gas demand remains three percent higher than at the same time last year. Looking ahead, there is potential for another winter storm to impact the U.S. in the latter half of the month.

International Demand  

While global markets began to rebalance in 2024, supply remains fragile in 2025, underscoring the increasing reliance on liquefied natural gas (LNG). The latest report from the International Energy Agency (IEA) projects that global natural gas markets will stay tight this year as demand continues to rise.

In 2024, global demand grew by 2.8 percent, driven primarily by Asia. The recent shutdown of all Russian natural gas transit through Ukraine in January 2025 could further increase Europe’s dependence on U.S. LNG imports. This rising demand presents an opportunity for the U.S., the world’s leading LNG exporter, which is set to expand its export capacity with several new facilities this year, including the second phase of Plaquemines LNG. Once completed, along with the launch of Corpus Christi LNG Stage 3 exports, the EIA estimates that U.S. LNG production capacity will reach 15.4 Bcf/d, with a potential peak of 18.7 Bcf/d.

Production & Supply

The decline in the U.S. natural gas rig count has slowed significantly compared to last year, with only a one percent drop from the previous week, in contrast to a 16.2 percent decline at the same time last year. While recent winter storms have influenced natural gas prices, producers remain cautious about production, with natural gas prices trading at or below $4 per million British Thermal Units (MMBtu).

As of January 31st, natural gas storage is 4.4 percent (111 Bcf) below the five-year average and eight percent (208 Bcf) lower than this time last year. This decline is largely due to the severe winter weather that swept across much of the U.S., driving up demand and depleting storage levels. While the U.S. still has a substantial natural gas supply in storage, continued winter storms could further widen the gap between current levels and the five-year average.

‍If you have any questions about the information in this newsletter or would like to talk to someone about your natural gas, please call your sales representative.

‍