Natural gas

Natural gas prices and storage
An early December cold snap is putting upward pressure on natural gas prices. The Henry Hub spot price in our forecast averages around $4.30 per million British thermal units (MMBtu) this winter heating season (November–March), 22% higher than last winter. We raised our forecast for prices this winter by more than 40 cents/MMBtu on average compared with last month’s STEO, largely because early December has been colder than we assumed in last month’s STEO, leading us to raise our estimate of natural gas used for space heating.

Based on data from the National Oceanic and Atmospheric Administration, we assume December will have 8% more heating degree days (HDDs) than the 10-year average, and 7% more HDDs than we assumed in last month’s forecast. Because of the colder weather, we now forecast the residential and commercial sectors will consume 6% more natural gas in December than we forecast last month, reducing the amount of natural gas held in storage. The United States entered the winter heating season with 4% more working natural gas in storage than the previous five-year (2020–2024) average. We expect inventory withdrawals will be 580 billion cubic feet (Bcf) this December, 28% more than the five-year average withdrawal for the month. We forecast U.S. natural gas stocks will end the winter at 2,000 Bcf, 9% above the five-year average.

Rising production helps moderate natural gas prices next year. We expect the Henry Hub spot price to average almost $4.50/MMBtu in 4Q26, down 5% from last month’s forecast. U.S dry natural gas production in our forecast averages 109 billion cubic feet per day (Bcf/d) in 2026, up 1% from this year. We raised our forecast for U.S. natural gas production compared with the November STEO after we updated our assumptions about natural gas-to-oil ratios (GORs). Specifically, we raised our expectations of GORs in the Permian region based on recent production trends, leading to more overall natural gas production in our forecast for 2026.