Europe's LNG Demand Ignites U.S. Gas Price Surge

Natural gas prices have been rising due to increased demand from Europe, which is struggling to find alternative sources of supply. The U.S. has been exporting more LNG (Liquefied Natural Gas) to meet this demand, with net flows to export terminals reaching 19.2 bcf per day in the latest week.

This increased demand has not led to a decrease in domestic production, however. In fact, lower-48 dry gas production reached 113.8 bcf per day, up 4.9% from a year ago. The EIA (Energy Information Administration) has even raised its 2027 production forecast to 116.0 bcf per day.

The European demand for LNG is being driven by a combination of factors, including the closure of the Strait of Hormuz and a shortage of Russian gas supplies. As a result, spot prices have surged to $26 per million British thermal units, more than 150% above February levels.