U.S. Natural Gas Outlook: Why 2026 Dips Before a Sharp 2027 Rebound

Tony Zelinski
30 minutes ago
2 min read

The latest Short-Term Energy Outlook from the U.S. Energy Information Administration paints a nuanced picture of where natural gas markets are headed — and it’s a story every energy leader should be tracking closely.

A Mild Softening in 2026

Henry Hub spot prices are expected to ease by about 2% in 2026, landing just under $3.50/MMBtu. The driver is straightforward: supply growth slightly outpaces demand growth. With production rising by roughly 1.1 Bcf/d and demand increasing by only 0.6 Bcf/d, the market remains comfortably balanced.

Storage levels also remain healthy through the end of 2025, sitting 1.7% above the five‑year average — a buffer that naturally keeps downward pressure on prices.

2027: A Different Story Entirely

By 2027, the balance flips. Demand growth accelerates to +2.5 Bcf/d, while supply growth slows to +0.9 Bcf/d. That gap — driven largely by LNG — tightens the market and pushes Henry Hub prices up sharply to just under $4.60/MMBtu, a 33% jump year over year.

LNG: The Engine Behind the Shift

Three major LNG export facilities reshape the demand landscape:

Plaquemines LNG
Corpus Christi Stage 3
Golden Pass LNG (beginning operations in 2026)

Together, they add 1.3 Bcf/d of new LNG demand in 2026 and another 1.7 Bcf/d in 2027.

As these facilities ramp up, feed gas demand grows faster than domestic consumption — tightening storage and lifting prices.

Domestic Consumption Stays Flat

Residential, commercial, and industrial consumption all decline slightly due to more normal weather and softer industrial activity. The electric power sector, however, continues its steady climb, relying on natural gas to meet load growth and balance intermittent renewables.

Storage Becomes the Market’s Compass

As inventories drift below the rolling five‑year average in 2027, the market transitions from comfortable to tight. Historically, that shift has been a reliable indicator of upward price pressure — and 2027 appears poised to follow that pattern.

If you’re navigating procurement, hedging, or long‑term energy strategy, this two‑year setup is a reminder: today’s softness may be short‑lived, and the LNG era is only accelerating.

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