The U.S. natural gas market witnessed heightened volatility in the last week of February, driven by fluctuating weather patterns, constrained production, and increasing Liquified Natural Gas (LNG) exports. Meanwhile, Japan, a key LNG importer, deepened its energy ties with both the U.S. and Middle Eastern suppliers, further diversifying its supply sources. These developments reflect a shifting global energy landscape, shaped by geopolitical and economic considerations.

Extreme cold during mid-February triggered a surge in U.S. natural gas demand, leading to a sharp price rally. However, as forecasts signaled a return to above-normal temperatures across the Lower 48 states through mid-March, demand expectations softened. Traders remained cautious about further price swings, with any late-winter cold snap potentially reigniting concerns over supply tightness.

Despite elevated demand, U.S. gas production struggled to recover completely. Drilling activity remained subdued, with key basins such as Haynesville and Appalachia operating fewer rigs compared to the previous year. Temporary freeze-offs further restricted output, though production showed signs of rebounding by the end of February. The slow recovery in drilling activity raised concerns about longer-term supply tightness, particularly as global demand continues to grow.

LNG exports played a pivotal role in supporting natural gas demand, with record feed gas flows to U.S. export terminals. The Trump administration’s move to ease restrictions on new LNG project approvals added further bullish sentiment, indicating potential future expansion in U.S. exports. With Europe increasingly turning to U.S. LNG amid reduced Russian gas flows, international demand for American supply remained robust, adding pressure on domestic inventories.

In a key geopolitical development, Japan reaffirmed its commitment to expanding LNG imports from the U.S. During a recent meeting, President Donald Trump and Japanese Prime Minister Shigeru Ishiba discussed increasing LNG trade to reduce Japan’s dependence on Middle Eastern and Russian energy. The $44 billion Alaska LNG project emerged as a focal point, with U.S. officials emphasizing its strategic benefits, particularly in bypassing key maritime chokepoints.

Beyond the U.S., Japan continued diversifying its LNG portfolio through a long-term agreement with ADNOC. Osaka Gas signed a 15-year contract for LNG supply from the Ruwais LNG project, further solidifying Japan’s access to stable, lower-carbon energy sources. The deal aligns with Japan’s broader strategy to secure reliable energy amid evolving geopolitical risks.

With global LNG demand on the rise, both U.S. and Middle Eastern suppliers stand to benefit. While U.S. natural gas prices showed resilience despite bearish weather forecasts, concerns over production recovery and storage deficits may keep markets volatile. For Japan, balancing imports from the U.S. and the Middle East strengthens its energy security while fostering deeper economic ties with key allies. The coming months will be crucial in shaping global energy flows and pricing dynamics.