Investing.com - U.S. natural gas prices retreated Thursday, weighed by improving weather conditions as well as concerns that the global trade war will hit economic activity, diluting demand requirements.

At 08:25 ET (12:25 GMT), natural gas prices rose 2% to $2.967 per million British thermal units, or MMBtu, but over 20% over the course of the last month.

“While we were looking for a setback in U.S. natural gas prices in the short term, the magnitude of the price drop still surprised us,” said analysts at UBS, in a note dated April 24.

Trade tensions and the resulting recession fears have been a major factor for the price drop, given a recession would likely weigh on industrial demand for natural gas, other cyclical commodities fell less than U.S. natural gas, the Swiss bank noted.

Another factor was likely stronger production in the Northeast (from the Appalachian shale basin), but that was likely also driven by stronger heating demand in the region.

Current prices, if sustained at these low levels, are likely to curb investment activity and weigh on production growth. Lower crude oil prices should also reduce associated natural gas production coming from fields focusing on crude production.

That said, UBS is starting to see some value in longer-dated gas contracts, such as summer 2026, given expectations that prices will climb above the $4/mmbtu mark driven by ongoing rising US natural gas exports.

Net exports of US liquefied natural gas (LNG) hit a record of 16.7 billion cubic feet per day in early April. A further increase in LNG exports is likely in 2026, as the Golden Pass LNG export terminal is expected to start by end-2025.