Investing.com - U.S. natural gas prices edged higher Wednesday, rebounding after a losing month as weather conditions improved, but the supply situation in the global market remains tight.

At 07:25 ET (12:25 GMT), natural gas prices rose 1.3% to $4.002 per million British thermal units, or MMBtu, but posted a monthly loss of around 3.5% in March.

Bargain buying has helped prices recover from recent losses, but short-term fundamentals continue to weigh heavily as weather forecasts through early April remain unfavorable for natural gas consumption.

That said, UBS thinks the global liquefied natural gas (LNG) market balance will remain tight until 2026.

“While a total of 127 Mtpa (million tons per annum) new capacity is planned online by then, lengthy commissioning and minor delays would limit net addition to 30 bcm (billion cubic meters) in 2025 and 42 bcm in 2026,” UBS said, in a note.

“Europe will stay a key LNG buyer, driven by lower storage and limited supply alternatives. We expect Asian LNG demand, including China, to remain muted this year due to high prices balancing the global market. In China, renewable growth softens gas demand, while Power of Siberia to reach full capacity would reduce LNG demand too.”

As a consequence, the Swiss bank has lifted its gas price forecast for Europe and Asia by 8% and 3% respectively.

“This reflects high 1Q25 gas prices due to back to normal weather, tighter market conditions, as well as delays in new liquefaction projects. Geopolitical risks may drive volatility, but we expect that gas prices will be eventually anchored by fundamentals, setting a price floor,” UBS added.

“We expect the market to loosen gradually as supply improves but not quickly enough to fully clear the structural tightness, which keeps prices elevated.”