Henry Hub Liquified Natural Gas (“LNG”) prices are roaring back, surging in February as frigid temperatures, falling inventories, and soaring LNG exports fuel a bullish rally.
With US storage dipping below the five-year average for the first time since 2022 and technical indicators flashing strength, does the rally have more room to run?
LNG RALLIES AS COLD WEATHER FUELS DEMAND AND TIGHTENS SUPPLY
CME Henry Hub Natural Gas Futures (“CME LNG Futures”) have surged 26% in February, rebounding from a 16.2% decline in January. The rally has been driven by rising exports, falling storage levels, supply disruptions, and colder-than-expected weather.
January’s decline was surprising, given that U.S. temperatures averaged 29.2°F in January (0.9°F below average, around -1.56°C), the coldest January since 2005. This resulted in the average daily gas consumption reaching 124.4 Bcf, which is 12% higher than the five-year average, according to the EIA.
Prices initially climbed 10.2% from 03/Jan to 24/Jan in response to strong demand, but a late-month selloff erased gains as forecasts turned milder.
February saw a swift rebound as colder-than-expected temperatures pushed heating demand beyond expectations, fuelling a price rally.
European gas markets added further support, with Dutch TTF prices hitting a two-year high on 11/Feb amid freezing weather, Norwegian supply disruptions, and rapid storage depletion.
However, European prices have eased recently due to Russia- Ukraine peace talks, milder forecasts, and discussions on EU storage policies.
LNG EXPORTS RISE AMID GROWING GLOBAL DEMAND
US LNG exports surged in January, driven by cold temperatures, depleting reserves, and Europe’s shift away from Russian gas. The US exported 8.46 million metric tonnes (412 Bcf) of LNG in January 2025, with 86% heading to Europe—a sharp increase from 69% in December reports Reuters. However, exports remain below the record 422.9 Bcf set in December 2023.
Source: EIA
Meanwhile, the latest EIA data (updated till December 2024) shows that US LNG exports rose 0.6% YoY in 2024.
Export volumes are poised to rise further, supported by Trump’s energy policies easing LNG infrastructure development. Gas flows to export terminals have increased, averaging 14.6 Bcfd in January, and expected to reach 15.6 Bcfd in February. Gas flows are well above the levels seen in Q4 2024, October (13.1 Bcfd), November (13.3 Bcfd), and December (13 Bcfd).
A key advantage for US LNG is the absence of destination clauses, allowing buyers to redirect shipments based on demand. Even if Europe does not fully wean off Russian gas, growing U.S. export capacity ensures flexibility to serve other markets, particularly Asia.
INVENTORIES FALL BELOW 5-YEAR AVERAGE; EIA RAISES HENRY HUB PRICE FORECAST
Amid colder-than-expected weather and rising LNG exports, LNG storage levels have fallen more than anticipated, dropping below the five-year average (2020–2024) for the first time since 2022.
Source: EIA Data
Storage fell below the five-year average in the week ending 24/Jan and remained below since. As of the week ending 21/Feb, inventories were 11.5% lower than the five-year average. Weekly storage declines have exceeded analyst expectations for four consecutive weeks, indicating stronger-than-expected demand.
Source: EIA
According to the EIA’s latest Short-Term Energy Outlook (STEO), January withdrawals from underground storage totalled nearly 1,000 Bcf, 39% above the five-year average. The agency expects inventories to end the withdrawal season (Nov–Mar) 4% below average, citing higher consumption and flat production through Q1 2025.
Source: EIA STEO
In response to tightening supply, the EIA raised its Henry Hub price forecasts for 2025 and 2026 by 20.7% and 4.8%, respectively, compared to prior estimates.
TECHNICAL INDICATORS SIGNAL SUSTAINED BULLISH MOMENTUM
With bullish fundamentals supporting Henry Hub prices, technical indicators also signal an uptrend.
Monitoring the 9-day EMA/21-day EMA cross helps identify trend shifts for day trading. A golden cross, a bullish signal (9-day EMA above 21-day EMA), indicates upward momentum, while a death cross, a bearish signal (9-day EMA below 21-day EMA), suggests weakening price action.
The 9-day EMA crossed above the 21-day EMA on 18/Feb, forming a golden cross. The widening gap suggests growing bullish momentum.
However, the MACD has turned negative after a strong bullish trend. Meanwhile, the RSI hovers at 50.39, down from its monthly peak of 66.60 & below its moving average of 56.66.
Source: TradingView
TradingView’s technical analysis dashboard also indicates a bullish trend.
COMMITMENT OF TRADERS
For the week ending 18/Feb, managed money’s net long positions in Henry Hub natural gas (futures & options) increased by 40% WoW, marking a second straight weekly gain. Long positions grew by 14.4% to 241,541 lots, while short positions inched up 0.2% to 137,674 lots.
Source: QuikStrike
Long positions have risen steadily since 11/Feb, while short positions remain unchanged, implying a growing bullish sentiment in the market.
HYPOTHETICAL TRADE SETUP
Multiple factors continue to support Henry Hub prices, including cold temperatures, rising LNG exports, expanding US LNG capacity, and falling inventories.
Adding to the bullish outlook, near-term production declines are expected to tighten supply through the remainder of winter. With these fundamentals in play and strong technical signals, natural gas prices may have further upside potential.
Portfolio managers and traders can capitalize on a bullish LNG outlook by tapping into CME Micro Henry Hub Natural Gas Futures. These contracts offer the same exposure as standard Henry Hub futures but at 1/10th the size, providing enhanced accessibility and more precise risk management opportunities.
This paper posits a long position in CME Micro Henry Hub Natural Gas Futures (Apr 2025) expiring on 26/Mar (MNGJ2025) with the following trade setup:
• Entry: 3.75/MMBtu
• Target: 4.25/barrel
• Stop: 3.45/barrel
• P&L at Target (per lot): +500 ((4.25 – 3.75) x 1,000)
• P&L at Stop (per lot): -300 ((3.45 – 3.75) x 1,000)
• Reward-to-Risk Ratio: 1.67x
CME Group lists a raft of products covering a range of asset classes more accessible while also enabling granular hedging for portfolio managers.
Investors can learn more about how to access these micro products by visiting the CME Micro Products page on the CME portal to discover micro-sized contracts to gain macro exposures.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
With US storage dipping below the five-year average for the first time since 2022 and technical indicators flashing strength, does the rally have more room to run?
LNG RALLIES AS COLD WEATHER FUELS DEMAND AND TIGHTENS SUPPLY
CME Henry Hub Natural Gas Futures (“CME LNG Futures”) have surged 26% in February, rebounding from a 16.2% decline in January. The rally has been driven by rising exports, falling storage levels, supply disruptions, and colder-than-expected weather.
January’s decline was surprising, given that U.S. temperatures averaged 29.2°F in January (0.9°F below average, around -1.56°C), the coldest January since 2005. This resulted in the average daily gas consumption reaching 124.4 Bcf, which is 12% higher than the five-year average, according to the EIA.
Prices initially climbed 10.2% from 03/Jan to 24/Jan in response to strong demand, but a late-month selloff erased gains as forecasts turned milder.
February saw a swift rebound as colder-than-expected temperatures pushed heating demand beyond expectations, fuelling a price rally.
European gas markets added further support, with Dutch TTF prices hitting a two-year high on 11/Feb amid freezing weather, Norwegian supply disruptions, and rapid storage depletion.
However, European prices have eased recently due to Russia- Ukraine peace talks, milder forecasts, and discussions on EU storage policies.
LNG EXPORTS RISE AMID GROWING GLOBAL DEMAND
US LNG exports surged in January, driven by cold temperatures, depleting reserves, and Europe’s shift away from Russian gas. The US exported 8.46 million metric tonnes (412 Bcf) of LNG in January 2025, with 86% heading to Europe—a sharp increase from 69% in December reports Reuters. However, exports remain below the record 422.9 Bcf set in December 2023.
Source: EIA
Meanwhile, the latest EIA data (updated till December 2024) shows that US LNG exports rose 0.6% YoY in 2024.
Export volumes are poised to rise further, supported by Trump’s energy policies easing LNG infrastructure development. Gas flows to export terminals have increased, averaging 14.6 Bcfd in January, and expected to reach 15.6 Bcfd in February. Gas flows are well above the levels seen in Q4 2024, October (13.1 Bcfd), November (13.3 Bcfd), and December (13 Bcfd).
A key advantage for US LNG is the absence of destination clauses, allowing buyers to redirect shipments based on demand. Even if Europe does not fully wean off Russian gas, growing U.S. export capacity ensures flexibility to serve other markets, particularly Asia.
INVENTORIES FALL BELOW 5-YEAR AVERAGE; EIA RAISES HENRY HUB PRICE FORECAST
Amid colder-than-expected weather and rising LNG exports, LNG storage levels have fallen more than anticipated, dropping below the five-year average (2020–2024) for the first time since 2022.
Source: EIA Data
Storage fell below the five-year average in the week ending 24/Jan and remained below since. As of the week ending 21/Feb, inventories were 11.5% lower than the five-year average. Weekly storage declines have exceeded analyst expectations for four consecutive weeks, indicating stronger-than-expected demand.
Source: EIA
According to the EIA’s latest Short-Term Energy Outlook (STEO), January withdrawals from underground storage totalled nearly 1,000 Bcf, 39% above the five-year average. The agency expects inventories to end the withdrawal season (Nov–Mar) 4% below average, citing higher consumption and flat production through Q1 2025.
Source: EIA STEO
In response to tightening supply, the EIA raised its Henry Hub price forecasts for 2025 and 2026 by 20.7% and 4.8%, respectively, compared to prior estimates.
TECHNICAL INDICATORS SIGNAL SUSTAINED BULLISH MOMENTUM
With bullish fundamentals supporting Henry Hub prices, technical indicators also signal an uptrend.
Monitoring the 9-day EMA/21-day EMA cross helps identify trend shifts for day trading. A golden cross, a bullish signal (9-day EMA above 21-day EMA), indicates upward momentum, while a death cross, a bearish signal (9-day EMA below 21-day EMA), suggests weakening price action.
The 9-day EMA crossed above the 21-day EMA on 18/Feb, forming a golden cross. The widening gap suggests growing bullish momentum.
However, the MACD has turned negative after a strong bullish trend. Meanwhile, the RSI hovers at 50.39, down from its monthly peak of 66.60 & below its moving average of 56.66.
Source: TradingView
TradingView’s technical analysis dashboard also indicates a bullish trend.
COMMITMENT OF TRADERS
For the week ending 18/Feb, managed money’s net long positions in Henry Hub natural gas (futures & options) increased by 40% WoW, marking a second straight weekly gain. Long positions grew by 14.4% to 241,541 lots, while short positions inched up 0.2% to 137,674 lots.
Source: QuikStrike
Long positions have risen steadily since 11/Feb, while short positions remain unchanged, implying a growing bullish sentiment in the market.
HYPOTHETICAL TRADE SETUP
Multiple factors continue to support Henry Hub prices, including cold temperatures, rising LNG exports, expanding US LNG capacity, and falling inventories.
Adding to the bullish outlook, near-term production declines are expected to tighten supply through the remainder of winter. With these fundamentals in play and strong technical signals, natural gas prices may have further upside potential.
Portfolio managers and traders can capitalize on a bullish LNG outlook by tapping into CME Micro Henry Hub Natural Gas Futures. These contracts offer the same exposure as standard Henry Hub futures but at 1/10th the size, providing enhanced accessibility and more precise risk management opportunities.
This paper posits a long position in CME Micro Henry Hub Natural Gas Futures (Apr 2025) expiring on 26/Mar (MNGJ2025) with the following trade setup:
• Entry: 3.75/MMBtu
• Target: 4.25/barrel
• Stop: 3.45/barrel
• P&L at Target (per lot): +500 ((4.25 – 3.75) x 1,000)
• P&L at Stop (per lot): -300 ((3.45 – 3.75) x 1,000)
• Reward-to-Risk Ratio: 1.67x
CME Group lists a raft of products covering a range of asset classes more accessible while also enabling granular hedging for portfolio managers.
Investors can learn more about how to access these micro products by visiting the CME Micro Products page on the CME portal to discover micro-sized contracts to gain macro exposures.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.