Natural gas

Natural gas storage
Compared with our June forecast, we expect more natural gas in storage in the coming months because of slightly more natural gas production and less power sector demand. As a result, we reduced our forecast for natural gas prices. Our forecast for more natural gas in storage and lower prices comes after seven consecutive weeks (from late April to early June) of net injections greater than 100 billion cubic feet (Bcf) contributed to a recovery in storage volumes. We estimate that U.S. natural gas inventories were 7% above the five-year average (2020–2024) at the end of June after ending the withdrawal season (November–March) 4% below the five-year average, the lowest in three years. Injections have exceeded the five-year average as U.S. natural gas production has increased in the 2Q25 compared with 1Q25. We expect inventories will end the injection season on October 31 with 3,910 Bcf of natural gas in storage, 5% more than we forecast in last month’s STEO and 3% more than the five-year average.

With more natural gas in storage in this forecast, we expect lower natural gas prices. The Henry Hub spot price averaged just over $3.00 per million British thermal units (MMBtu) in June, and we expect it will average just almost $3.40/MMBtu in 3Q25, 16% less than last month’s forecast. LNG demand and natural gas production will be two key drivers of price in the coming months. If LNG demand is more or production is less than our forecast, inventories may end the injection season below our forecast and natural gas prices may be higher than forecast. At the same time, with above-normal hurricane activity expected this summer, LNG exports may be disrupted if storms hit along the Gulf Coast, which could result in more U.S. inventories and lower natural gas prices than expected.

Natural gas production
Marketed natural gas production averaged 116.8 billion cubic feet per day (Bcf/d) in 2Q25, a 4.7 Bcf/d increase compared with the same period in 2024. We expect production to remain near this level through 2026, averaging around 116 Bcf/d in both 2025 and 2026. Higher natural gas prices throughout 2025 compared with last year have supported this sustained production. The U.S. benchmark Henry Hub spot price averaged $3.67/MMBtu in 1H25, compared with $2.11/MMBtu in 1H24.

Although production in our forecast remains relatively flat going forward, we forecast U.S. marketed natural gas production will increase almost 3% this year compared with 2024, largely because of rising production in the first half of the year. This increase is driven mainly by the Permian region, which we expect to produce 27.0 Bcf/d in 2025, or 6% more than in 2024, along with increases in the Appalachia and Haynesville regions. We forecast U.S. marketed natural gas production will remain flat in 2026 as production growth from the Permian and Appalachia regions will offset the overall decline in production from the rest of the United States.