U.S. natural gas futures jumped about 9% to a 26-month high on March 4 on record flows to LNG export plants and forecasts for higher demand next week than previously expected.

Traders said prices also gained support on worries gas exports from Canada to the U.S. could decline due to the start of U.S. President Donald Trump's tariffs on Canada and Mexico on March 4.

Front-month gas futures for April delivery on the New York Mercantile Exchange rose 37.2 cents, or 9.0%, to $4.49/MMBtu at 10:54 a.m. EST, putting the contract on track for its highest close since December 2022.

The price increase occurred despite near-record output and forecasts for the weather to remain mild through the middle of March, which should allow utilities to pull less gas out of storage in coming weeks.

Extreme cold weather earlier this year, however, already has forced energy firms to pull massive amounts of gas out of storage, including record amounts in January, cutting stockpiles to around 12% below the five-year (2020-2024) normal. 

Looking forward, the premium of futures for March over April 2026 rose to a 14-month high on March 4. Some analysts said it signals the market is betting energy firms will have a tough time rebuilding stockpiles to normal levels by the winter of 2025-2026, which could cause prices to spike during the winter months if the weather turns extremely cold.

March is the last month of the winter storage withdrawal season and April is the first month of the summer storage injection season. Since gas is primarily a winter heating fuel, traders have said summer should not trade above winter because demand for the fuel is generally higher during winter months.

The industry calls the March-April spread the "widow maker" because rapid price moves on changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 billion in 2006.

Supply and demand

Average gas output in the Lower 48 U.S. states rose to 105.6 Bcf/d so far in March, up from a record 104.7 Bcf/d in February, according to LSEG data.

On a daily basis, output was on track to decline by 1.8 Bcf/d over the past four days to a preliminary 104.7 Bcf/d on March 4, down from a three-week high of 106.5 Bcf/d on Feb. 28. That compares with an all-time daily high of 106.7 on February 6.

In the import market, the U.S. was on track to pull in around 8.3 Bcf/d of gas from Canada on March 4, down from an average of 9.6 Bcf/d over the prior seven days. That compares with 8.6 Bcf/d in 2024 and an average of 7.6 Bcf/d over the prior five years (2019-2023).

Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through March 19.

With milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 118.8 Bcf/d this week to 115.2 Bcf/d next week. The forecast for this week was lower than LSEG's outlook on March 3, while its forecast for next week was higher.

The amount of gas flowing to the eight big U.S. LNG export plants held at an average of 15.6 Bcf/d so far in March, the same as February's record high, as new units at Venture Global's 3.2-Bcf/d Plaquemines LNG export plant under construction in Louisiana enter service.

On a daily basis, LNG feedgas was on track to fall to a preliminary three-week low of 15.2 Bcf/d on March 4 on small declines at several export plants. That compares with an all-time daily high of 16.4 Bcf/d on February 23.

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