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Investing.com – Natural gas prices are expected to experience significant volatility in 2025, according to BofA Securities analysts.
Analysts suggest that markets are likely to see increased supply and rising prices due to factors such as increased demand for imported natural gas and reduced production growth. in important bowls like Haynesville.
This is consistent with a broader structural change leading to higher demand for natural gas in both domestic and international markets.
According to BofA estimates, natural gas prices could reach $4.00 per MMBtu on the NYMEX, marking an increase from earlier expectations.
This price increase is underpinned by tight supply-demand balances expected in the second half of 2025.
The start-up of offshore LNG projects, such as Plaquemines LNG and Corpus Christi Stage 3, will add new demand, which may exceed the ability of US producers to meet this demand at current levels of supply growth.
These facilities alone are expected to generate an increased demand of 3.5 billion cubic feet per day.
The report highlights challenges to production growth, particularly in the Haynesville Basin, which faces structural constraints such as declining resource levels and disruptive infrastructure development.
Analysts note that production in the basin has been declining steadily, with little capacity to ramp up to meet new demand.
Consolidation among Haynesville producers is seen as a double-edged sword: while it has improved operational efficiency, it has also strengthened production discipline, meaning it is not easy for producers to fill the market too much.
Meanwhile, LNG demand and domestic electrification are seen as long-term drivers for natural gas consumption, positioning natural gas as an important part of energy transition strategies.
BofA analysts argue that global LNG opportunities strengthen the case for higher US natural gas prices, as international markets remain willing to pay a premium for gas compared to local standards.
On the other hand, oil markets face a tougher outlook for 2025, with BofA suggesting an extreme scenario that could keep oil prices low.
This trend is expected to increase the appeal of gas exploration and production companies relative to their oil-focused counterparts.
As gas prices remain relatively weak compared to long-term fundamentals, BofA sees an opportunity to reassess gas-focused prices.
In Canada, the upcoming Shell-operated Canadian LNG terminal is expected to provide an economic boost to Western Canadian natural gas producers.
While the full development of this facility will take time, it is expected to strengthen AECO’s fundamentals over time, benefiting manufacturers such as Ovintiv (NYSE:), which was upgraded to “Buy” by BofA in this thesis.
