Natural gas

Natural gas prices
On an annual basis, U.S. natural gas prices are relatively flat in 2026 before rising in 2027 as market conditions tighten. We expect the Henry Hub natural gas spot price will average just under $3.50 per million British thermal units (MMBtu) this year, a 2% decrease from 2025, and then rise by 33% in 2027 to an annual average of almost $4.60/MMBtu. The Henry Hub spot price picks up in 2027 as demand growth outpaces supply growth. Expanding U.S. liquified natural gas (LNG) export capacity and higher natural gas consumption in the electric power sector contribute to stronger demand in 2027, pushing storage inventories below the five-year (2021–2025) average and placing upward pressure on prices.

In near-term developments for this winter, we have lowered our Henry Hub price forecast for the first quarter of 2026 to an average of $3.38/MMBtu from $4.35/MMBtu last month. Our forecast assumes January temperatures will be milder-than-normal, which will likely limit natural gas consumption during the time of year when demand for space heating typically reaches its annual peak. Expectations of less natural gas demand have caused prices to drop sharply. The Henry Hub spot was below $3/MMBtu on January 9, down from around $5/MMBtu a month earlier.

Natural gas demand and production
U.S. dry natural gas production continues to increase through the forecast period. We expect U.S. production will increase 1% this year to almost 109 billion cubic feet per day (Bcf/d), when growth is led by the Permian region. We expect Permian region natural gas production to grow as new takeaway capacity is added, particularly in the second half of the year. In 2027, natural gas production again increases by 1%, as growth shifts to the Haynesville region, where increases in natural gas prices drive the deployment of drilling rigs.

Although production continues to grow in 2027, it slows relative to demand growth. Total U.S. natural gas demand, including exports, grows by 2% in 2027, resulting in demand exceeding total supply—production plus imports. We forecast total demand to reach 119 Bcf/d in 2027, more than 1 Bcf/d higher than total supply, contributing to tighter market balances that support higher natural gas prices later in the forecast.

Growth in total demand is driven primarily by expanding LNG exports and rising consumption in the electric power sector. LNG exports increased by 26% in 2025 and continue to grow through 2027, albeit at a slower pace. They remain the largest source of demand growth over the forecast period, growing by 9% in 2026 and 11% in 2027. The increase is the result of the ramp-up of three new LNG export facilities: Plaquemines LNG, Corpus Christi Stage 3, and Golden Pass LNG. Plaquemines LNG and Corpus Christi Stage 3 will continue ramping up to full operations during our forecast period, and we expect Golden Pass LNG to begin operations by the middle of 2026.

Natural gas use for electricity generation also increases steadily as natural gas-fired capacity supports power demand growth and balances renewable generation. In contrast, combined industrial, residential, and commercial natural gas consumption decreases by 3% in 2026 and remains relatively flat in 2027. Consumption of natural gas in the industrial sector decreases in 2026 and 2027 in our forecast because weather assumptions are closer to long-term average conditions and industrial activity is lower, as measured by the natural gas-weighted manufacturing index.