At 15:17 GMT, Natural Gas Futures are trading $3.313, up $0.269 or +8.48%.
How Are Tariffs Impacting Natural Gas Prices?
The U.S. imports 5–7% of its daily gas supply from Canada, making the new tariffs a significant cost factor. Analysts estimate the 10% tariff adds about $0.20/MMBtu to Canadian imports, pushing up Henry Hub prices as a result.
Additionally, U.S. dry gas production remains constrained due to low rig counts. Many gas basins have operated with minimal drilling activity since early 2023 due to suppressed prices. With limited ability to offset reduced Canadian imports, the market is pricing in a tighter supply scenario, especially in the West and Midwest.
Mexican oil exports are also affected, with a 25% tariff further disrupting North American energy flows. Analysts estimate that Canadian gas exports to the U.S. could drop by 0.16 billion cubic feet per day, adding another layer of supply uncertainty.
Is Weather Playing a Role in the Rally?
Colder weather forecasts are reinforcing the bullish momentum. Initial February projections indicated a mild start, but over the weekend, models adjusted to show a return to near-normal temperatures by mid-month. This shift has increased expectations for additional heating demand.
The latest Energy Information Administration (EIA) report also added to bullish sentiment, showing a massive 321 Bcf storage withdrawal due to January’s extreme cold. This draw exceeded both last year’s levels and the five-year average, tightening inventories at a time when traders are already concerned about potential supply constraints.