Natural gas prices (NG=F) are on track to close the year in negative territory. But there is optimism for 2025, largely due to exports abroad and increased demand caused by artificial intelligence.
“We are constructive on energy, and because we are constructive on energy, we believe natural gas will do well,” Francisco Blanch, head of global commodities and derivatives research at Bank of America, said during a recent roundtable on energy outlook.
Natural gas prices are down 10% year to date, largely due to mild winters and abundant supply. But industry observers are betting on increased gas exports and increased energy demand through manufacturing facilities and artificial intelligence data centers.
“These… centers have to operate 24 hours a day, 7 days a week,” Bank of America’s Blanche said. Data center power demand is expected to grow by 10% to 15% annually between now and 2030 – and could account for up to 5% of total global power demand by 2030.
“(Natural gas) will allow infrastructure to be built and will allow generating plants to operate to produce electricity,” Dennis Kessler, senior vice president at BOK Financial, told Yahoo Finance. He added, “Natural gas will be the fuel of the future.”
Case in point: Power and utility equipment maker GE Vernova (GEV) recently raised its forecasts for its gas turbines.
“If you think about the United States, 40% to 45% of our electricity comes from gas power today, and we’re about to enter a real load cycle,” GE Vernova CEO Scott Straczyk told Yahoo Finance. recently. “In the rest of the world, that number is closer to 25%. But as other parts of the world like the United States transition — with things like coal to gas — the proportion of gas electricity will grow.”
The erosion of regulation surrounding the energy business, which is expected under the new Trump administration, is also expected to benefit the industry.
For example, the administration is expected to get rid of restrictions surrounding LNG export permits and pipeline projects. “Regulations are an additional cost,” said Philip Rossetti, a resident fellow at the right-leaning R Street Institute. “If you expect less regulation, you can probably expect more profitability.”
Shares of Oklahoma-based natural gas processing and transportation company Williams Companies (WMB) and midstream oil and gas operator Oneok (OKE) are up more than 40% year to date.
Meanwhile, US LNG exports are expected to rise by 15% next year, according to government data, as Europe continues to build storage capacity to reduce its dependence on Russia amid the war in Ukraine.
“Europe is in a phase now to increase its LNG infrastructure, and a lot of that LNG will come from the United States,” said Kessler of BOK Financial.
S&P Global Commodity Insights expects prices at the Henry Hub, the main futures delivery point, to average more than $4.00 per million metric British thermal units (MMBtu) in 2025 after two years averaging less than $3.00 per MMBtu. British.
“Rising exports will put significant pressure on the domestic natural gas market in the United States,” the organization’s 2025 Energy Outlook said.
However, some Wall Street analysts believe that the full impact of policy changes related to exports and delays regarding LNG supply projects may delay the upward price movement in the commodity market. Goldman Sachs analysts now expect natural gas to reach $4 per million British thermal units in 2026 instead of the previous timeline of Q4 2025.
Ince Ferry is Yahoo Finance’s chief business correspondent. Follow her on X in @ines_ferre.
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