The U.S. Energy Department's latest inventory report showed a higher-than-expected decrease in natural gas supplies. Despite this bullish data, futures ended the week down on expectations that fewer people would use the fuel to heat their homes due to increasing temperatures.
Notwithstanding the weekly dip, natural gas prices remain resilient, driven by limited production growth and strong global demand. Trading above $4 after hitting its highest level since December 2022, the market remains firm. Given this backdrop, investors may focus on stocks like Antero Resources AR, Coterra Energy CTRA and Gulfport Energy GPOR.
Stockpiles held in underground storage in the lower 48 states fell by 62 billion cubic feet (Bcf) for the week ended March 7, above analysts’ guidance of a 44 Bcf depletion. The decrease compared with the five-year (2020-2024) average net decline of 56 Bcf and last year’s decline of 19 Bcf for the reported week.
The weekly withdrawal put total natural gas stocks at 1,698 Bcf, 628 Bcf (27%) below the 2024 level, and 230 Bcf (11.9%) lower than the five-year average.
The total supply of natural gas averaged 110.7 Bcf per day, down 0.8 Bcf per day on a weekly basis, due to lower dry production.
Meanwhile, daily consumption fell to 110 Bcf from 114.8 Bcf in the previous week, mainly reflecting lower residential/commercial usage due to higher-than-normal average temperatures.
Natural gas prices fell last week despite a larger-than-expected inventory draw. Prices were dragged down by predictions of milder weather over the next few weeks. April futures closed at $4.104 on the New York Mercantile Exchange, marking a 6.7% decrease.
However, even with this loss, one has to consider the fact that the commodity recently surged to a two-year high of $4.491. A combination of cold weather, supply constraints, and strong global demand has kept prices elevated, with Europe and the United States experiencing record withdrawals from storage during winter.
Natural gas markets tightened in 2024, driven by a mix of severe winter conditions and limited production growth. The United States saw multiple Arctic cold snaps that boosted heating demand while simultaneously leading to freeze-offs in key producing regions like the Permian and Appalachia. These disruptions caused a significant drawdown in storage levels, with working gas stocks 5% below the five-year average by late February 2025.
Europe is facing an even worse supply crunch. With Russian gas transit through Ukraine halted on Jan. 1, 2025, the continent is now more reliant on LNG imports, primarily from the United States. The country has emerged as the world’s largest LNG supplier, with exports averaging 16 Bcf per day — a record high. European and Asian buyers continue to absorb American LNG cargoes, pushing domestic supply lower and reinforcing price strength.
Heading into the summer of 2025, storage injections will be a key focus. The EIA expects U.S. inventories to be 4% below the five-year average at the end of the withdrawal season in March, providing continued support to prices. Additionally, with summer demand for electricity rising and LNG exports maintaining record levels, natural gas prices are expected to stay above $4/MMBtu in the near term.
Antero Resources: It is one of the leading natural gas producers in the United States. Antero Resources has more than two decades of premium low-cost drilling inventory in the prolific Appalachian Basin, indicating a strong production outlook. AR churned out 316 billion cubic feet equivalent (Bcfe) in the most recent quarter, of which more than 60% was natural gas.
The Zacks Consensus Estimate for Antero Resources’ 2025 earnings per share indicates an astounding 1,381% year-over-year growth. Over the past 60 days, the Zacks Rank #1 (Strong Buy) AR has seen its 2025 EPS projection move up around 27.5%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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 #3 (Hold) company’s share of natural gas in its overall production is around 65%.
Coterra’s expected earnings per share growth rate for three to five years is currently 15.5%, which compares favorably with the industry's growth rate of 12.3%. Valued at around $21.1 billion, the Zacks Consensus Estimate for CTRA’s 2025 earnings has moved up around 3.4% over the past 60 days.
Gulfport Energy: Gulfport Energy is a natural gas-focused exploration and production company headquartered in Oklahoma City, OK. Operating primarily in the Utica Shale in Ohio and the SCOOP play in Oklahoma, Gulfport has emerged from bankruptcy with a stronger balance sheet and a free cash flow-oriented strategy. With more than 90% natural gas production, the company prioritizes Utica development to drive free cash flow, reduce debt and align with ESG-focused investor expectations.
The Zacks Consensus Estimate for Gulfport Energy’s 2025 earnings per share indicates 57.1% year-over-year growth. This Zacks Rank #3 firm has a Growth Score of B. Over the past 60 days, the Zacks Consensus Estimate for GPOR’s 2025 earnings has edged up around 1%.
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