What drives the natural gas price?

Natural Gas Price

Natural gas is a key energy source used for heating, electricity generation, and industrial processes. Its price swings dramatically based on weather, supply disruptions, storage levels, and export demand. In the US, prices are measured in dollars per million British thermal units at the Henry Hub benchmark. In Europe, prices trade in euros per megawatt hour at the TTF benchmark. Between 2023 and 2026, US natural gas prices ranged from around $3 to above $6, making it one of the most volatile commodities in global markets.

Main drivers

What pushes natural gas price up

Extreme cold weather — Freezing temperatures increase heating demand while simultaneously shutting down wells through freeze-offs, squeezing supply from both sides.
Production declines — Lower output from pipeline maintenance, well shutdowns, or drilling cutbacks tightens the available supply.
Rising liquefied natural gas (LNG) exports — Record shipments to overseas buyers drain domestic supply, leaving less gas available at home.
Large storage withdrawals — Bigger-than-expected draws from underground reserves signal that demand is outpacing supply.
Oil production cutbacks (indirect) — When oil prices fall and shale producers cut drilling, they also reduce the natural gas that comes out of those same wells.
Tariffs on Canadian energy imports — Trade barriers on Canadian gas raise fears of cross-border supply disruptions.
Geopolitical supply risks in Europe — Uncertainty over Russian gas flowing through Ukraine lifts European prices and tightens the global market.

What pushes natural gas price down

Mild or warming weather — Above-normal temperatures reduce heating demand and slow the pace of storage withdrawals.
Rising domestic production — Record output from US shale fields floods the market with supply.
Healthy storage levels — High inventory levels reduce urgency among buyers and ease price pressure.

Historical examples

When natural gas price increased

Extreme cold weather
- January 2026 historic winter storm — US natural gas futures surged more than 17% in a single day, climbing above $6 for the first time since December 2022. The storm knocked offline nearly 10% of US production while heating and electricity demand approached winter record levels. Over one week, prices jumped roughly 70%, the largest weekly increase in over three decades.
- January 2025 eastern US cold snap — Cold temperatures in the eastern US caused daily gas supply to dip to a six-week low. Production disruptions from freeze-offs combined with rising LNG export flows to push prices higher.
Production declines
- October 2025 output slide — Production in the Lower 48 states averaged 106.5 billion cubic feet per day, down from a record 108.0 in August. Daily output was expected to hit a four-month low of 104.4, supporting higher prices.
- May 2025 pipeline maintenance — Average output dropped to 103.9 billion cubic feet per day from a record 105.8 in April, partly because of maintenance on a major pipeline in the Permian Basin. Production fell 3.5 billion cubic feet per day over just four days.
Rising LNG exports
- January 2026 near-record shipments — Shipments to overseas buyers averaged about 18.5 billion cubic feet per day, near record levels. This sustained outflow tightened domestic supply during the coldest stretch of winter.
- April 2025 export record — LNG exports hit a record average of 16.0 billion cubic feet per day, driven by increased flows to a new facility under construction in Louisiana.
Large storage withdrawals
- February 2025 massive draw — Extreme cold drove utilities to withdraw 321 billion cubic feet from storage in a single week, far exceeding both the prior year and the five-year average.
- January 2026 above-average draw — A withdrawal of 114 billion cubic feet, larger than usual, signaled tightening supply conditions heading deeper into winter.
Oil production cutbacks (indirect)
- May 2025 shale drilling cuts — After oil fell to $58.3 per barrel on fears of an OPEC+ supply boost and weak Chinese demand, major Permian Basin producers trimmed output forecasts. Because natural gas is produced alongside oil in those wells, gas output fell. US natural gas futures jumped over 6% to above $3.325.
Tariffs on Canadian energy imports
- February 2025 tariff announcement — Prices surged 10% after the US announced 10% tariffs on Canadian energy products and 25% on Mexican oil. Analysts estimated Canadian gas exports to the US could drop by 0.16 billion cubic feet per day.
Geopolitical supply risks in Europe
- December 2024 Russia-Ukraine transit fears — European TTF prices rose to nearly €48.7 per megawatt hour, close to their highest since October 2023. Concerns over the expiring Russia-Ukraine gas transit deal combined with storage levels at just 85% full, compared to 95% a year earlier.

When natural gas price decreased

Mild or warming weather
- February 2026 European warm spell — European TTF prices fell 5% to below €31 per megawatt hour, the lowest in five weeks, as weather models pointed to above-normal temperatures. At the same time, US prices fell to a four-month low on warmer weather, which also freed up more LNG cargoes for European buyers.

Who benefits

When natural gas price rises

Energy producers (US, Canada) — Higher prices boost revenues and profit margins for companies that drill and sell natural gas.
Energy sector stocks (Italy, Canada) — Oil companies and utilities outperform broader markets. In January 2025, Italian energy stocks were top performers. Canadian energy giants rose between 0.8% and 2.6% in February 2025.
Nuclear power operators (France) — Expensive gas makes nuclear electricity more competitive. French nuclear output rose to its highest level since 2015 in December 2024 as European gas prices climbed.
LNG exporters (US) — High international prices make US export shipments more profitable, encouraging record-level flows.

When natural gas price falls

Consumers and distributors (Brazil, Europe) — Lower gas costs reduce heating and electricity bills. In April 2023, Brazilian stocks rose after the state oil company announced an 8.1% cut in natural gas prices for distributors.
European manufacturers (Germany) — Germany is a major gas importer. Lower prices reduce import costs and ease pressure on factory input prices. In March 2025, German import prices showed natural gas up 34.6% year over year, highlighting how painful high prices had been.
Bond markets (Italy, Canada) — Falling gas prices ease inflation fears, reducing pressure on central banks to keep interest rates high. This allows government bond prices to recover and the interest paid on those bonds to decline.
Inflation-sensitive households (Canada, Eurozone) — Lower gas prices slow the rise in consumer gasoline and heating costs. Canadian inflation ticked up to 1.9% in January 2025 partly because of surging energy costs. A reversal would provide relief.
Energy-importing economies (Switzerland) — Countries that import most of their energy see producer costs fall when natural gas prices drop, easing economy-wide price pressures.