Natural gas prices were on a rollercoaster ride in 2024, ending with a dramatic 44% annual increase — their best performance since 2021. While natural gas prices have surged due to cold weather and rising liquefied natural gas (“LNG”) demand, the market remains volatile. Geopolitical tensions, shifting weather patterns, and supply-demand imbalances will define 2025. However, for investors, resilient players like Coterra Energy CTRA, Cheniere Energy LNG and Range Resources RRC offer a hedge against this volatility while capturing the potential upside of a recovering market.
Natural gas’ 2024 spike was largely driven by an exceptionally cold December in the United States and Europe, which pushed up demand for heating. Front-month natural gas futures hit a 52-week high of $4.20/MMBtu by late December, marking a nearly 50% gain for the year. Meanwhile, production grew steadily, averaging 103.3 billion cubic feet per day (Bcf/d) in December, though slightly below the record 105.3 Bcf/d set in 2023.
Geopolitical tensions added to the drama. Europe’s reliance on U.S. liquefied natural gas (‘LNG’) deepened as the Ukraine-Russia gas transit agreement expired. With European inventories depleting faster than average, reliance on U.S. exports solidified America’s position as the world’s largest LNG exporter. Two new LNG facilities — Venture Global’s Plaquemines plant and Cheniere Energy’s Corpus Christi Stage 3 — further expanded export capacity.
The natural gas market is set to remain volatile in 2025, balancing production growth with unpredictable demand and geopolitical risks. The Energy Information Administration (“EIA”) forecasts U.S. production to rise modestly to 105 Bcf/d, driven by LNG export demand, which is expected to climb to 17.8 Bcf/d from 15.2 Bcf/d in 2024.
Weather remains the wild card. Current forecasts of a colder January have pushed up short-term prices, but a shift in temperature trends could quickly reverse this trajectory. The U.S. winter season and Europe’s efforts to replenish depleted storage will likely dominate early 2025 pricing trends.
China and Europe also play critical roles. China's demand for natural gas is expected to grow as the country increases LNG imports. In Europe, however, storage concerns and a potential resumption of Russian gas supplies could temper bullish sentiments.
LNG continues to reshape the natural gas market. U.S. export capabilities have expanded significantly, with the commissioning of new facilities like Plaquemines and Corpus Christi. By late 2025, additional capacity from the Golden Pass LNG terminal, a joint venture between QatarEnergy and ExxonMobil, could further bolster exports.
This LNG growth benefits producers and infrastructure players alike. Companies like Cheniere Energy capitalize directly on rising export volumes, while upstream firms like Coterra Energy and Range Resources gain from robust domestic demand for feedstock. LNG exports now serve as a vital pressure valve, absorbing excess supply and stabilizing domestic prices.
Given the market’s inherent unpredictability, focusing on fundamentally strong companies is key for investors this year.
Coterra Energy: It is an independent upstream operator primarily engaged in the exploration, development and production of natural gas. Headquartered in Houston, TX, the firm owns some 183,000 net acres in the gas-producing Marcellus Shale of the Appalachian Basin. The Zacks Rank #1 (Strong Buy) company’s share of natural gas in its overall production is around 65%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Coterra’s expected earnings per share growth rate for three to five years is currently 10.1%, which compares favorably with the industry's growth rate of 8.3%. Valued at around $19.3 billion, CTRA has gained 6.1% in a year.
Cheniere Energy: Being the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal, Cheniere Energy enjoys a distinct competitive advantage.
Cheniere Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. The Zacks Rank #3 (Hold) natural gas exporter has a trailing four-quarter earnings surprise of roughly 87.5%, on average. LNG shares have moved up 34.7% in a year.
Range Resources: The company is an U.S. independent natural gas producer with operations focused in the Appalachian Basin. Range Resources’ large contiguous acreage position provides more than 30 years of low-breakeven, high-return inventory. The company produced 202.8 Bcfe from these assets in the third quarter of 2024 — 68% natural gas.
Range Resources beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The #3 Ranked upstream operator has a trailing four-quarter earnings surprise of roughly 33.7%, on average. RRC shares have increased 17.6% in a year.
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