US natural gas has moved decisively above the US$5 mark, reaching levels last seen in 2022. This recent strength is being driven by hard fundamentals that suggest a tightening balance just as winter demand ramps up.
Export volumes of liquefied natural gas have risen sharply, with November seeing a year-on-year increase that is now beginning to weigh on domestic availability. Despite steady production, inventories are already drawing down. Utilities have now tapped reserves for three consecutive weeks, a clear indication that the market is entering a more constrained phase. At the same time, weather models are calling for colder-than-average conditions across key demand regions in the Northeast and Great Lakes.
The futures curve has responded accordingly, with the front end pushing higher and triggering renewed interest from traders and producers alike. While US output remains healthy, it is not outpacing the draw. And with export facilities running near capacity, any further increase in overseas demand could tighten the system more quickly than markets are currently pricing.
Touchstone Exploration Inc (LON:TXP) is a Canadian-based, international upstream oil and gas company currently active in the Republic of Trinidad and Tobago. Primera Oil and Gas is the Trinidadian subsidiary of Touchstone.
