The U.S. Energy Information Administration (EIA) revised up its forecasts for the Henry Hub natural gas spot price for 2026 and 2027 in the July edition of its Short-Term Energy Outlook (STEO). The update reflects a market supported by growing demand, yet constrained by high inventory levels and continuously record-high production.
According to the agency, the average Henry Hub price will reach $3.67 per MMBtu in 2026 and $3.49 per MMBtu in 2027. These figures exceed the estimates published in June, which placed the values at $3.60 and $3.46 per MMBtu, respectively.
Elevated Inventories Moderate Price Increases
The EIA explained that natural gas inventories will remain above the five-year average for much of the analyzed period. This situation will help contain further upward pressure on prices despite the anticipated increase in consumption.
Likewise, the agency indicated that record natural gas production, driven primarily by activity in the Permian Basin, will continue to supply the growing demand of the U.S. market.
At the end of June, working gas inventories were 6% above the five-year average. Additionally, the EIA projects that storage will reach 3,966 Bcf by the end of October, equivalent to a level 5% higher than the historical average for that time of year.
Quarterly Forecasts Show a Market with Seasonal Variations
The report also includes a quarterly estimate for the Henry Hub price. The EIA expects an average of $3.37 per MMBtu during the third quarter of 2026, followed by $3.57 in the fourth quarter. For 2027, it forecasts $3.83 in the first quarter, $2.99 in the second, $3.36 in the third, and $3.78 in the fourth.
According to the agency, the availability of inventories before winter will limit price behavior. Therefore, it estimates that the average value for the fourth quarter of 2026 will be 5% lower than that recorded in the same period of the previous year.
Analysts Warn of Short-Term Downward Pressure
On the other hand, EBW Analytics Group believes that weather conditions could exert additional pressure on the market in the coming weeks.
Eli Rubin, an analyst at the firm, noted that a forecast of more moderate temperatures across large areas of the central and eastern United States would reduce seasonal natural gas demand for cooling.
The specialist added that the August contract fell to $2.847 per MMBtu before partially recovering, while the Henry Hub spot price stood at $2.81 per MMBtu. According to his analysis, if the weather continues to soften, LNG demand remains moderate, and production continues to increase, NYMEX-traded gas prices could experience further declines towards the end of summer.
Source: Rigzone
Photo: Shutterstock
