LNG exports hit record high, but struggle to rescue trapped Permian production; Texas natural gas spot prices trapped in negative territory again.

Due to the expectation that the maintenance of natural gas pipelines in the United States will impede fuel delivery for some time, the spot price of natural gas in West Texas recently fell to below zero for the second consecutive day, reaching the lowest level in nearly 14 months. Traders familiar with intraday trading prices (not fully disclosed) stated that the "Waha Hub next-day delivery natural gas spot price" in the prolific Permian Basin, which has been extremely active since the beginning of this year, remained negative on Monday, despite a slight rebound from the multi-month low point of last week. Last Friday, the trading price fell to about negative $3.03 per million British thermal units, the lowest since November 2024. On Monday, the price briefly touched this level and continued to decline before slightly rebounding. Recently, the U.S. natural gas transportation giant Kinder Morgan Inc. closed sections of its El Paso and GCX pipelines due to maintenance-related issues. The company's Permian Highway pipeline is scheduled for maintenance next month. The natural gas production in the U.S. Permian Basin continues to grow, and it is far from the strongest demand areas in the Gulf Coast and Southern California, meaning that natural gas drillers are constrained by pipelines. The existing pipelines are insufficient to handle the current massive supply of natural gas in the United States. Kinder Morgan Inc. has declined to make any comments on matters beyond the pipeline documents it has published online. Despite the overall increase in liquefied natural gas exports in recent months due to the production of new factories such as Plaquemines in Louisiana, pipeline shutdowns will lead to oversupply in the region. Core natural gas basins such as Haynesville in Louisiana will continue to supply gas to LNG export facilities along the Gulf Coast. Due to weakening seasonal demand and strong production, the spot price of natural gas in West Texas has been negative for some time. This means that natural gas producers are essentially paying buyers to quickly take away the gas. Why did the next-day delivery spot/cash price of Waha Hub fall below zero? The so-called "negative price" refers to the next-day delivery (day-ahead) physical spot price of natural gas at the Waha Hub in the Permian Basin of West Texas falling below zero mainly due to high production and limited pipeline maintenance/outbound capacity, sellers need to "pay" to get rid of the gas. An analysis report by the EIA (U.S. Energy Information Administration) has indicated that the rapid growth in gas production in the Permian Basin, combined with maintenance or failures leading to insufficient outbound pipeline capacity, results in short-term "excess gas with limited outlets," which can cause the spot price to turn negative. The main form of this is sellers paying buyers to take the gas away in order to "get rid of" it. The "cash price/spot price" of the U.S. natural gas trading system is the physical spot or next-day delivery price formed at regional hubs (such as the mentioned Waha and another core hub, the Henry Hub) quoted in $/MMBtu (dollars per million British thermal units). It is usually published by Gas Daily/Inside FERC based on transaction announcements. The cash price reflects local supply and demand and pipeline constraints, unlike the financial market's futures price system. Driven by the AI data center, the trend of U.S. natural gas prices has been strong since 2024. Overall, from the perspective of the general benchmark price of U.S. natural gas trading, the Henry Hub spot price in the first half of 2025 averaged $3.66/MMBtu, about 67% higher than the full-year average of $2.19/MMBtu in 2024. Monthly statistics show that many months since 2025 have been above $3, significantly higher than the overall trading price range in 2024 (which hit a historical low of $1.51/MMBtu in March 2024). Individual major gas-producing regions (such as West Texas's Waha) may experience short-term negative prices due to pipeline maintenance/bottlenecks, which may be a local phenomenon and have occurred intermittently in the past two years. For example, in 2024, Waha Hub had nearly half of its trading days with negative prices, with about 46% of trading days below zero in the period from January to August, with a record low of -$6.41/MMBtu on August 29. The core logic behind negative prices lies in the combination of high production in the Permian Basin and maintenance/bottlenecks in outbound pipelines, resulting in local spot supply being held back, causing the cash price (next-day delivery) to easily fall below zero in times of short-term supply-demand imbalance. The overall strengthening of U.S. natural gas prices this year is mainly driven by the large-scale construction of AI data centers led by companies such as Meta and Google, which have pushed electricity demand to record highs. LNG exports have also increased, boosting external demand, contributing to the price increase. In the global energy landscape, as countries seek cleaner energy alternatives to oil and coal, the importance of natural gas resources, especially liquefied natural gas (LNG), is gradually surpassing the oil system. For AI data centers in particular, which require massive electricity systems, natural gas, as a clean and more efficient energy source, will become one of the core important energy sources in the coming years. In the view of some Wall Street analysts, AI training/inference systems are a key factor driving the growth in natural gas energy demand. Large data centers such as Google, Microsoft, and Amazon AWS have shown tremendous demand for cleaner energy sources like natural gas in recent years. This is mainly due to the global trend, especially in developed countries in Europe, towards decarbonization, focusing on clean sources such as wind power, geothermal energy, and renewable resources, as well as clean and more efficient energy sources such as natural gas.