Overview Natural gas is a gaseous hydrocarbon fuel used for power generation, industrial heat, chemical feedstock, and residential and commercial heating. In commodity markets, it is commonly priced by energy content, with the standard U.S. benchmark being the Henry Hub Natural Gas Spot Price, quoted in U.S. dollars per million British thermal units (MMBtu). One million metric British thermal units is a closely related energy unit used in some market references, but pricing conventions in North American trade are typically expressed per MMBtu. Natural gas is transported through pipelines where available and as liquefied natural gas (LNG) for long-distance seaborne trade. Its market value reflects both physical delivery constraints and the cost of moving gas from producing basins to consuming centers. Because gas is difficult to store compared with oil, regional pipeline capacity, LNG liquefaction and regasification infrastructure, and seasonal demand swings play an outsized role in pricing. Natural gas also serves as a flexible fuel in electricity systems, where it often competes with coal, fuel oil, nuclear generation, renewables, and imported LNG. Supply Drivers Natural gas supply is shaped by geology, infrastructure, and the pace at which wells decline. Major producing regions include North America, Russia, the Middle East, and parts of Central Asia, where large sedimentary basins contain conventional gas or associated gas from oil fields. In North America, shale and tight gas production depends on continuous drilling because individual wells typically decline faster than conventional reservoirs. This creates a strong link between prices, drilling activity, and capital spending. Weather and seasonality affect supply indirectly through freeze-offs, hurricane disruptions in coastal production areas, and maintenance schedules for pipelines and processing plants. Gas must often be processed to remove liquids, water, and impurities before entering transmission systems, so midstream infrastructure can become a bottleneck even when reservoir output is ample. LNG supply adds another layer of constraint: liquefaction plants, shipping availability, and regasification terminals require large fixed investments and long lead times. Because storage is limited relative to annual consumption, supply must remain closely matched to demand over short intervals. This makes pipeline congestion, storage injection and withdrawal cycles, and regional basis differentials persistent features of the market. Demand Drivers Natural gas demand comes from power generation, industrial combustion, residential and commercial heating, and petrochemical production. In electricity markets, gas is valued for its dispatchability and relatively low emissions of sulfur dioxide, particulates, and carbon dioxide per unit of energy compared with coal and oil. This makes it a common balancing fuel when electricity demand changes quickly or when variable renewable generation needs backup. Industrial demand is structurally important because gas is both a fuel and a feedstock. It is used to produce ammonia, methanol, hydrogen, and a wide range of chemicals and fertilizers. In these applications, demand depends on manufacturing activity, agricultural input cycles, and the economics of competing feedstocks such as naphtha or coal. Residential and commercial demand is highly seasonal in colder climates because space heating creates strong winter consumption peaks, while cooling demand can also rise in hot-weather regions through gas-fired power generation. Substitution is a central feature of gas demand. Power generators can switch between natural gas, coal, fuel oil, and in some systems LNG imports, depending on relative prices and plant design. Over longer periods, efficiency gains, electrification, and environmental regulation influence consumption patterns, but the basic role of gas as a flexible heat and power fuel remains persistent. Macro and Financial Drivers Natural gas prices are sensitive to the U.S. dollar because the benchmark is dollar-denominated and because international LNG trade is often priced in dollars. A stronger dollar can affect import demand and the competitiveness of U.S. exports in global markets. Interest rates matter through their effect on storage economics, capital spending, and the financing of pipelines, LNG terminals, and drilling programs. Unlike many metals, natural gas is not usually treated as a broad inflation hedge; its price is driven more by physical balance than by monetary factors. Storage costs and limited storage capacity create pronounced seasonal patterns, with prices often reflecting the value of carrying gas from periods of surplus into periods of peak demand. This can produce contango when storage is abundant and backwardation when immediate supply is tight. Natural gas also tends to correlate with energy-sector equities, industrial activity, and weather-sensitive trading strategies, but the dominant driver remains the balance between deliverable supply and near-term consumption. Related Commodities Crude oil is related through associated gas production and through competition in some industrial and power applications. Coal competes with gas in electricity generation, especially where plant fleets can switch fuels. Heating oil and propane are substitutes in residential and commercial heating in some regions. LNG is not a separate commodity in a strict sense, but it is the main form that links regional gas markets across oceans.