Natural Gas Markets: LNG Demand Surge and European Storage Race
Henry Hub fell to a 3-month low as US supply outpaced LNG export demand. Meanwhile, Europe's gas storage injections hit a record pace as buyers secured summer supply.
Executive Summary
US Henry Hub natural gas prices averaged $2.14/MMBtu in May, declining from April's $2.31 as mild weather and record US production (104.4 Bcf/d) overwhelmed demand. The structural oversupply from Permian associated gas and the Haynesville renaissance continues to cap domestic prices.
In Europe, TTF averaged €34.2/MWh as utilities raced to fill storage ahead of winter. EU storage reached 62% full by month-end — well above the 5-year seasonal average of 52% — reducing the geopolitical risk premium that dominated 2022–2023.
Henry Hub Spot Analysis
May average: $2.14/MMBtu — down 7.4% from April.
Production reached a record 104.4 Bcf/d driven by:
- Permian associated gas growth (now ~22 Bcf/d)
- Haynesville shale wells coming online from the 2024 drilling spree
- Mild May temperatures suppressing power burn demand
LNG export capacity remains the key demand support. US LNG feedgas averaged 14.8 Bcfd — essentially at nameplate capacity — as Sabine Pass, Corpus Christi, and Freeport all ran near full rates.
Price outlook: Summer storage injection demand will provide modest support, but the market is well-supplied. We see Henry Hub ranging $2.00–$2.50/MMBtu through Q3 absent a weather event.
European Gas Markets
TTF Price Action
TTF averaged €34.2/MWh in May, declining from April's €38.1 on mild temperatures and strong LNG arrivals from the US, Qatar, and Australia.
Storage Injection Race
| Country | Storage Fill (May 31) | YoY Change | |---|---|---| | Germany | 64% | +9 pp | | France | 59% | +5 pp | | Italy | 61% | +7 pp | | Netherlands | 58% | +4 pp | | EU Average | 62% | +8 pp |
European buyers front-loaded purchases after the 2024 winter draw was heavier than expected. The strong storage position reduces the urgency of autumn buying — a near-term bearish signal for TTF.
Global LNG Market
US LNG exports reached a record 97 cargoes in May, equivalent to ~14.4 Bcfd. Key destinations:
- Europe: 51 cargoes (52%)
- Asia: 38 cargoes (39%)
- Latin America: 8 cargoes (9%)
Asian LNG spot (JKM) averaged $12.8/MMBtu — down from April's $14.2 as Chinese buying slowed post-winter restocking. Japanese and Korean utilities covered most of their summer needs in Q1.
New capacity coming: Plaquemines LNG Train 1 commenced operations in April and reached stable feedgas rates of 0.9 Bcfd in May — its first full month of production. Train 2 commissioning is targeted for Q3 2025.
Upstream Gas Activity
US gas-directed rig count averaged 101 rigs in May — near the lowest since 2020. Operators are running minimum maintenance programs, preferring to keep DUCs in inventory pending price recovery.
The Haynesville basin saw the sharpest decline: 42 rigs, down from a 2023 peak of 67. At current prices, many operators require $2.75–$3.00/MMBtu to justify new wells.
Risk Factors & Outlook
Upside risks to prices:
- Heat wave driving power burn above 40 Bcfd
- Plaquemines LNG ramp pulling additional feedgas
- Unplanned outages at Gulf Coast processing facilities
- Atlantic hurricane season disrupting Gulf production
Downside risks:
- Continued production growth outpacing export growth
- Mild summer temperatures
- European demand weakness reducing Asian diversion flows
- Sabine Pass or other trains going to planned maintenance
Q3 2025 Henry Hub forecast: $2.10–$2.60/MMBtu (base case: $2.30)
Data Sources
- EIA Natural Gas Weekly Update — May 2025
- IEA Gas Market Report — May 2025
- ENTSOG EU Storage Dashboard
- Kpler LNG tracking data
- Baker Hughes Rig Count — May 30, 2025
This report is published by Greenstone Energy Ltd for informational purposes only. It does not constitute investment advice.