Natural Gas Prices
Tue Aug 19, 2025 8:19 am
Weather always has a lot to do with U.S. natural gas prices. Mild weather (compared to normal HOT) in May and June caused gas in storage to build more than normal. This is why SEP25 is below $3.00/MMBtu. At $2.83 this morning, it is still 27% higher year-over-year.
EIA Forecast:
We expect the Henry Hub natural gas spot price will rise from an average of
$3.20 per million British thermal units (MMBtu) in July to $3.90/MMBtu in 4Q25 and
$4.30/MMBtu next year. Rising natural gas prices reflect relatively flat natural gas production
amid an increase in U.S. liquefied natural gas exports.
U.S. natural gas prices have been lower this year than we forecasted in previous STEOs earlier this year,
with high volumes of natural gas put into storage so far this injection season (April–October). Although
we expect natural gas prices to be generally lower than we were forecasting a few months ago, we still
expect prices to rise from current levels, driven by tighter market balances. The U.S. benchmark Henry
Hub spot price averaged almost $3.20 per million British thermal units (MMBtu) from April through July,
$0.80/MMBtu below the April STEO forecast.
In our April STEO, we expected natural gas inventories in working gas storage to be 3% less than the five
year average at the end of the injection season on October 31. We now expect it to be about 2% higher
than the five-year average. Our higher end-of-season storage forecast is largely the result of more
natural gas production and fewer liquefied natural gas (LNG) exports than we had expected in April, with
maintenance at multiple terminals extending over the second quarter. Because we expect more natural
gas will be in storage in the coming months, we forecast prices will be lower. The Henry Hub price in this
STEO averages around $3.60/MMBtu in 2H25 and $4.30 in 2026, which is 21% and 6% lower than we
forecast in April, respectively. However, monthly forward price curves continue to reflect expectations
of gradually increasing prices through the end of 2026. April has the lowest monthly average price in our
2026 forecast at around $3.60/MMBtu. We expect prices will rise from there, reaching more than
$5.40/MMBtu in December.
Although our storage forecast is higher than it was in April, we still expect natural gas inventories to fall
closer to the five-year average in the coming months, putting upward pressure on prices. After growing
by more than 1 billion cubic feet per day (Bcf/d) from 1Q25 to 2Q25, dry natural gas production will fall
by a similar amount over the next year. At the same time, we expect that LNG exports will grow around
2 Bcf/d, further tightening supply-demand balances and contributing to higher prices later in the
forecast period.
Natural Gas Production
Rising natural gas production in recent months has added to higher-than-anticipated inventory levels.
We expect marketed natural gas production to grow by 3% over 2024 volumes, supported by growth of
2 Bcf/d in the Permian region and 0.9 Bcf/d in each of the Haynesville and Appalachia regions in 2025.
This growth has been sustained in part by the deployment of drilling rigs to natural gas-intensive shale
plays. Baker Hughes reported on August 8 that 19 more active rigs were focused on drilling for natural
gas than there were at the start of April, an 18% increase. The Haynesville region led the increase in
natural gas-directed rig deployment.
We expect marketed natural gas production will be generally unchanged next year, even though we
expect falling oil prices will reduce production of associated natural gas, particularly in the Permian
Basin. However, production declines will be muted as producers strategically position themselves to
meet rising demand from several LNG projects that are set to enter service in late 2025 and 2026. We
forecast marketed annual natural gas production to remain flat in 2026 compared with 2025, when
increased non-associated gas production from the Haynesville region (0.3 Bcf/d) and Appalachia (0.7
Bcf/d) offset declines in the Eagle Ford and relatively flat production in the Permian. In the Haynesville region,
we expect production to remain near current levels through early 2026, before rising in the second
quarter in response to LNG-related demand. The start of the Louisiana Energy Gateway pipeline, which
is planned to enter service during this period, will support rising Haynesville output by improving
takeaway capacity. Additional export capacity from the new Golden Pass facility and Plaquemines LNG
Phase 2 are also set to come online over the next two years.
Dan Steffens
Energy Prospectus Group |
