Investing.com — U.S. prices rose in early 2025, with Henry Hub spot up about 12% year-to-date and Cal 25 strip up about 20%, analysts Mizuho (NYSE: ) recorded this week.
The rapid growth has fueled debate among investors about whether it is time to lock in gains or expect further increases.
Mizuho analysts said that while some underlying drivers of higher gas prices were expected, the size and speed of the price increase exceeded expectations.
“LNG project start-ups, disciplined supply growth, well activity below maintenance levels and secular domestic demand” were identified as key factors contributing to a potentially undersupplied market for 2025.
Despite these bullish fundamentals, the company says the question remains whether prices have climbed too high too quickly.
One key indicator Mizuho uses to gauge the near-term direction of gas prices is days of U.S. storage demand.
They explained that as of January 10, 2025, U.S. natural gas supplies could only meet 22.2 days of demand, compared to a five-year average of 25 days for this time of year.
Mizuho notes that this is the lowest level recorded in five years for this period, suggesting tighter supply conditions.
However, analysts warn of the danger of extreme price movements. “The cure for high prices is high prices,” as markets tend to balance through increased supply or decreased demand, the company wrote.
Even so, current conditions – peak winter season, muted drilling activity, rising LNG demand and forecasts of colder weather – suggest near-term power may be maintained.
Mizuho maintains a conservative outlook for the full year 2025 with an estimated average gas price of $3.50, compared to the current gas price of $3.84. The firm highlights Coterra Energy (NYSE: ), BKV, EXE and EQT (ST: ) as preferred stocks with exposure to gas.
