LIVE MARKETS-Natural gas: Slow boil supports long-term growth - WFII
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NATURAL GAS: SLOW BOIL SUPPORTS LONG-TERM GROWTH - WFII
Natural gas prices NGc1 surged over the past month, increasing nearly 60% from October 16 to November 13.
Prices are pulling back sharply on Tuesday.
However, Edward Lee, Investment Strategy Analyst at the Wells Fargo Investment Institute (WFII), has his views on where natural gas may be headed longer-term.
"The recent cold weather has driven up heating and energy consumption, putting pressure on inventories and providing a strong tailwind for natural gas prices," writes Lee in a note.
He adds that "Record U.S. liquefied natural gas (LNG) exports driven in part by demand from Europe, which shifted away from Russian natural gas in response to Russia's war with Ukraine, have further tightened domestic supply amplifying upward price momentum."
While the exact timing and magnitude are unpredictable, winter price spikes are common as demand heats up, which not surprisingly makes natural gas consumption highly seasonal.
"Consumption increases as colder weather sets in as heaters are switched on, then declines in spring as temperatures warm - driving prices higher in winter and lower in spring," Lee writes.
That said, Lee notes that overall consumption has grown, signaling a long-term upward trend.
WFII expects this growth to continue, supported by rising power demands from data centers - a key driver in the AI wave. This is part of the reason, Lee says, that WFII is favorable on the Midstream Energy and Integrated Oil S&P 500 index .SPX subsectors.
(Terence Gabriel)
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NatGas11252025 
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