On Wednesday, US natural gas futures fell by more than 4%, with the front-month natural gas futures for April delivery (NG1!) on the New York Mercantile Exchange (NYMEX) closing at $2.917 per million British thermal units, down 4.5%. The contract had previously reached its highest price since February 23 but then stabilized.
Escalating Middle East Tensions Heighten Supply Concerns
The conflict between the US and Iran escalated as the US military struck an Iranian ship near Sri Lanka, crippling the Strait of Hormuz shipping for the fifth day. This disruption affected the crucial oil and gas flow in the Middle East, prompting investors to reassess the risks to Middle Eastern energy supplies. Ritterbusch & Associates noted that natural gas prices might consolidate between $2.90 and yesterday's high this week.
Compared to the European gas market, the US gas market has shown a relatively mild response to the Middle Eastern conflict, with previous sharp increases in European gas prices.
US Supply and Demand Fundamentals
Financial data provider LSEG shows that the average natural gas production in the Lower 48 states of the US in March remained at 109.5 billion cubic feet per day, while it had reached a monthly high of 110.6 billion cubic feet in December 2025. According to a Reuters poll, due to recent warmer weather and subdued heating demand, US energy companies might have withdrawn 55 billion cubic feet of gas from storage last week.
LSEG predicts that the average natural gas demand in the Lower 48 states, including exports, will decrease from 123.3 billion cubic feet per day this week to 112.7 billion cubic feet per day next week. The gas flow to the nine large US LNG export plants also fell from 18.7 billion cubic feet per day in February to 18 billion cubic feet per day so far in March.
Global Disruptions in Natural Gas Supply
On Wednesday, QatarEnergy announced that due to production facility impacts amid the US-Israel conflict with Iran, it would implement force majeure on LNG shipments. After significant rises earlier this week, Dutch and UK gas prices fell on Wednesday, though the market is still watching the duration of Qatar's LNG supply disruptions.
Despite the disruptions in energy flows due to the Middle East conflict, oil prices remained near multi-month highs. There were reports that Iranian agents are seeking talks with the US to end the conflict, limiting the increase in prices.
