Analysts have consistently forecast significantly higher US natural gas prices in 2026 despite varying weather expectations, suggesting that natural gas prices may be more resilient to heating and cooling demand changes in the coming years.
The Energy Information Administration (EIA) since January of 2025 has forecast higher gas prices in 2026 caused by US gas production being unable to keep up with growing LNG demand.
The US has about 17.5 Bcf/d (181bn m³/yr) of gas liquefaction capacity in operation and 15 Bcf/d under construction, with more than half of this additional capacity expected to be commissioned by the end of 2028. As the liquefaction process generally loses about 10-20pc of the feedgas pumped into it, meeting new commissions will require 9.9-10.8 Bcf/d of new feedgas in the coming years.
US production will likely be unable to completely meet this demand growth, as the EIA's most recent forecast shows US dry natural gas production only growing 1pc in 2026 to 109 Bcf/d.
As a result, while heating and cooling demand will continue to effect daily and weekly spot price swings, gas prices in 2026 and beyond are very likely to rise above 2025's levels regardless of weather outlooks.
The first of 2025's Short-Term Energy Outlooks (STEO), which are published monthly by the EIA, estimated that average prices at the Henry Hub, the US benchmark, would rise to almost $4/mmBtu in 2026. The EIA's forecasts for 2026 average prices soared all the way to $4.90/mmBtu in June's STEO on growing LNG export demand and on expectations that natural gas inventories would end the injection season on October 31st below the five-year average.
Consistently mild weather throughout 2025 ultimately left natural gas inventories 4.3pc above the five-year average on 31 October. Even after a cold snap at the beginning of December that spiked heating demand, inventories are expected to end the winter withdrawal season on 31 March at 9pc above the five-year average.
Because of shifting inventory expectations and forecasts for increased gas production in the Permian basin of west Texas and southeastern New Mexico, analysts have moderated 2026 price expectations down from nearly $5/mmBtu. The EIA's December STEO forecast gas prices to average $4.01/mmBtu in 2026. While significantly lower than forecasts from earlier this year, a $4.01 average would be 14pc higher than the roughly $3.50/mmBtu average in 2025 and 83pc higher than the $2.19/mmBtu average in 2023.
Analysts frequently adjust their price expectations based on forecast inventory levels, as high inventories can keep gas prices low by easing concerns about spikes in demand or supply shortfalls. When mild weather restricts demand for gas powered heating or cooling, inventories stay well stocked and prices generally fall.
However, EIA forecasts average gas prices will rise significantly in 2026 regardless of shifting weather predictions and inventory variance because the growth of LNG now makes it very likely that gas demand growth in the coming years will outstrip production growth, ensuring price gains regardless of the weather outlook.
