Record US natural gas supply keeps Henry Hub from breaking out as production continues to outpace demand
๐ The EIAโs June STEO shows the US natural gas market entering a fairly unusual phase, where both production and demand are rising, but the short-term balance still leans toward supply.
๐ US dry natural gas production is forecast to reach around 111 Bcf/d in 2026 and continue rising to 113.6 Bcf/d in 2027. This remains a very high level, reflecting the major role of associated gas from areas such as the Permian and additional supply from Haynesville.
๐ก The key point is that the EIA forecasts average Henry Hub prices at only around 3.60 USD/MMBtu in 2026, then slightly lower at 3.46 USD/MMBtu in 2027. This suggests rising demand is still not strong enough to create major price pressure while production and inventories remain elevated.
โ ๏ธ US natural gas consumption is still increasing, especially during summer when gas-fired power demand may be boosted by hotter weather. However, inventories above the five-year average are creating a large buffer, helping the market avoid a near-term shortage.
โฑ๏ธ LNG exports remain a long-term support factor, especially as the US continues to play an important role in global energy supply chains. Even so, in the short term, the main story for Henry Hub is still supply growing faster than demand.
โ Overall, this report is positive for US natural gas supply capacity but not strongly bullish for near-term prices. Unless summer heat becomes unusually intense or LNG exports rise faster than expected, US gas prices may remain capped in a sideways range.