Natural Gas Prices Hit New Heights Amid Supply and Demand Changes

U.S. natural gas prices have dramatically increased this month, surging by about 50% to $3.40 per million British thermal units as of Nov. 21, marking the highest levels seen in over a year.

Key Drivers Behind the Price Surge

November is set to be the strongest month for natural gas pricing at the Henry Hub since July 2022. Several factors are fueling this sharp increase, including rising geopolitical tensions, unusually cold weather across the U.S., and escalating export demand.

For investors, this price rebound has shifted focus to natural gas stocks that are likely to benefit from the renewed energy market momentum.

• Plunging Temperatures Across the U.S.: Following a warmer-than-average start to winter, severe cold has arrived. The National Oceanic and Atmospheric Administration forecasts the first major snowfall of the season for parts of central and northern Appalachia, causing heating demand to rise sharply.
• Geopolitical Tensions Between Russia and Ukraine: Recently, the tensions between Russia and Ukraine have escalated, with Russia launching an intercontinental ballistic missile and Ukraine using Western-made missiles to target Russian territory. This situation is adding a risk premium to the natural gas markets.
• Supply Concerns in Europe: Earlier this month, Austria’s OMV Group announced it would cease receiving natural gas from Russia’s Gazprom, sparking worries of winter supply shortages in Europe and potentially increasing U.S. liquefied natural gas (LNG) exports.

Stock Opportunities in the Natural Gas Sector

As prices continue to rise, several U.S. energy companies are in a good position to capitalize on higher commodity prices and increased demand. Here are seven stocks to keep an eye on:

1. EQT Corporation EQT

EQT is the largest natural gas producer in the U.S., primarily operating in the Appalachian Basin. The company stands to gain significantly from the rise in domestic gas prices.

Shares of EQT Corp. have jumped 30% so far this month, making it the strongest month for the stock since March 2022.

2. ONEOK, Inc. OKE

Operating in midstream sectors, ONEOK processes and transports natural gas, benefiting from increased pipeline volumes as demand rises.

ONEOK’s shares have risen 19.6% in November, looking to achieve their best monthly performance since November 2020.

3. Targa Resources Corp. TRGP

Targa focuses on gathering and processing natural gas, positioning itself to benefit from strong domestic demand and growth in exports.

The company’s shares have climbed 24% this month, heading for the 10th consecutive month of gains—the best in four years.

4. Kinder Morgan, Inc. KMI

As one of the U.S.’s largest pipeline operators, Kinder Morgan plays an essential role in natural gas transportation.

Stocks for Kinder Morgan have grown 16% in November, potentially marking the best month since November 2020.

5. Antero Resources Corporation AR

Focusing on natural gas and liquids production, Antero Resources has good exposure in the Appalachian region, where colder temperatures are pushing demand up.

Shares of Antero Resources have surged 32% this month, recovering following a drop of 9.7% in October.

6. Cheniere Energy, Inc. LNG

As the leading exporter of liquefied natural gas in the U.S., Cheniere benefits from the global demand for natural gas, especially in Europe.

Cheniere’s stock has gained 16% this month.

7. Williams Companies, Inc. WMB

Williams operates extensive natural gas infrastructure and transmission pipelines, crucial for connecting supply to markets.

Shares have increased 13.6% in November, following a notable 14.7% increase in October.

Future Projections for Natural Gas

The EIA’s latest Short-Term Energy Outlook (STEO) shows optimism about short-term gains in natural gas prices, driven by a combination of strong winter demand and increasing LNG exports.

With colder temperatures expected, the EIA has raised its consumption estimates, particularly for residential and commercial heating. Demand for these sectors is now estimated to reach an average of 36 billion cubic feet per day (Bcf/d), up 4% from last winter.

Looking ahead to 2025, the EIA predicts U.S. marketed natural gas production will grow by 1%. The Permian Basin is expected to lead this growth with a 6% increase, followed closely by a 5% rise from the Eagle Ford region.

Henry Hub natural gas prices are projected to steadily increase, averaging $2.80 per million British thermal units in the first quarter of 2025, and $2.90 for the entire year. This represents a significant 33% increase from the 2024 average of $2.20/MMBtu.

Additionally, LNG exports are anticipated to significantly boost demand next year, with projections of an increase of nearly 2 Bcf/d by 2025. The growth in LNG capacity will align with sustained international demand, further enhancing the outlook for rising natural gas prices in 2024.

A Cautious Outlook from Goldman Sachs

Goldman Sachs presents a more cautious view on future natural gas prices due to delays in the construction and operation of new LNG export facilities across the Americas.

Analyst Samantha Dart mentioned that these delays could temper the expected increases in U.S. natural gas prices and complicate Europe’s gas storage replenishment efforts for the upcoming season.

As a result, Goldman Sachs adjusted its 2025 Henry Hub price forecast downward to $3/MMBtu from an earlier projection of $3.40/MMBtu. The firm has also shifted its estimate for U.S. natural gas to reach $4/MMBtu to 2026, delaying it from the fourth quarter of 2025.

While slower U.S. LNG export growth might alleviate some domestic price pressures temporarily, it poses challenges for Europe, which could have fewer LNG supplies available for storage next summer.

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