【Special Feature on Natural Gas】The peak season of consumption is approaching and gas prices are poised to rise

Improved summer consumption limited gas price correction

In the first quarter of this year, natural gas prices fell due to weaker-than-expected demand growth from a mild winter and falling manufacturing demand. In the second quarter, natural gas consumption gradually improved, leaving less room for price corrections this summer than in previous years, with prices hitting as low as $2.62.

The improvement in supply and demand in the US has been delayed

The Middle East, one of the world's most concentrated regions for natural gas resources, serves as a stabilizing force in global gas supply. Qatar, Iran, and the UAE represent the region's key players. Qatar's natural gas exports reached 79.5 million tons in 2024, maintaining its position among the world's top three for years. The country's ongoing expansion of natural gas production capacity is expected to profoundly impact the global gas market in the coming years. Currently operating at a stable annual capacity of 77 million tons, Qatar's production remains relatively steady.

The Qatar NorthField Expansion Project (NFE/NFS) will further solidify its dominant position. According to the plan, the project will gradually come into operation between 2026 and 2028, with an annual production capacity exceeding 126 million tons. However, the first production line of NFE is currently delayed by six months to one year, which is likely to reduce global new supply by 8 to 12 million tons in 2026-2027, temporarily alleviating the pressure of oversupply.

In recent years, the United States has emerged as a rising force in natural gas exports. The CalcasieuPass LNG project, operated by VentureGlobal, boasts a designed capacity of 10 million tons per year. This infrastructure comprises 18 modular units, each with an annual production capacity of 120 tons. The project secured its final investment decision in 2019, with construction scheduled to begin in 2022 and commercial operations expected to commence by 2022. However, the company only gradually commenced commercial operations in 2025.

The peak season of consumption has driven up gas prices

China is highly likely to experience a severe winter this year. This week, multiple northern cities recorded their lowest temperatures since the start of autumn, with the first snowfall arriving over a month earlier than usual. The conditions for a "double La Niña" event in 2025 are intensifying, making this winter particularly prone to extreme cold. This suggests China's natural gas demand during the coming winter will remain relatively strong.

Seasonally, natural gas shows distinct seasonal patterns. As Europe and the U.S. have entered winter, natural gas heating has become a key component. With the anticipated cold winter, downstream demand for natural gas is expected to continue recovering.

In September, China's domestic natural gas heavy-duty trucks sold 21,000 units, marking a 258% year-on-year increase and 32% month-on-month growth. From January to September, cumulative sales reached 137,000 units, up 2% year-on-year. Natural gas semi-trailer tractors saw stronger performance: September sales hit 20,000 units, reflecting a 277% year-on-year surge and 32% month-on-month growth. Cumulative sales from January to September totaled 132,000 units, up 2% year-on-year. The adoption rates stood at 20% for heavy-duty trucks and 36% for semi-trailer tractors in September. These figures indicate a steady upward trend in natural gas consumption within China's transportation sector, which is expected to maintain stable growth momentum in the coming period.

Chen Yu, senior analyst at Zhisheng Research (exclusively invited by Plotio)  , believes that the marginal improvement of supply and demand in the current natural gas market means that under the background of demand recovery, the natural gas price will again show a seasonal rise, which is a highly probable event.

From a technical perspective, the weekly chart shows the market rebounded after hitting the $2.62 support level, maintaining an upward trend with fluctuations. This week's rally has successfully breached both the 20-day and 62-day moving averages, indicating a potential resurgence of bullish momentum. On the daily chart, if the market breaks through the $3.57 resistance zone, it could potentially challenge the $4.14 key resistance level.

[Important Disclaimer:The above content and views are provided by Zhisheng, a third-party cooperative platform, for reference only and do not constitute any investment advice. Investors who trade based on this information shall bear their own risks.]
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