In its latest short term energy outlook (STEO), the U.S. Energy Information Administration (EIA) noted that “reductions in the flow of liquified natural gas (LNG) through the Strait of Hormuz have caused natural gas prices in Europe and Asia to increase” but added that it expects U.S. natural gas prices “to be relatively unaffected by this development”.
The EIA outlined in the STEO, which was released on March 10, that LNG export facilities “were already operating at a high level of utilization prior to the Middle East conflict, limiting the ability to export additional volumes in the near term”.
“Most of the flexibility in exports will be in the ramp-up at Corpus Christi State 3 (Train 5), which was completed in February and at Golden Pass Train 1, which is set to come online this month,” the EIA added.
In its latest STEO, the EIA projected that the U.S. natural gas Henry Hub spot price will average $3.76 per million British thermal units (MMBtu) in 2026 and $3.85 per MMBtu in 2027.
A quarterly breakdown included in the EIA’s latest STEO showed that the EIA sees the commodity coming in at $4.79 per MMBtu in the first quarter of this year, $3.10 per MMBtu in the second quarter, $3.33 per MMBtu in the third quarter, $3.82 per MMBtu in the fourth quarter, $4.14 per MMBtu in the first quarter of 2027, $3.52 per MMBtu in the second quarter, $3.69 per MMBtu in the third quarter, and $4.04 per MMBtu in the fourth quarter of 2027.
In its previous STEO, which was released in February, the EIA saw the U.S. natural gas Henry Hub spot price averaging $4.31 per MMBtu in 2026 and $4.38 per MMBtu in 2027.
A quarterly breakdown included in that STEO showed that the EIA saw the commodity coming in at $5.48 per MMBtu in the first quarter of this year, $3.61 per MMBtu in the second quarter, $3.86 per MMBtu in the third quarter, $4.29 per MMBtu in the fourth quarter, $4.70 per MMBtu in the first quarter of next year, $4.12 per MMBtu in the second quarter, $4.18 per MMBtu in the third quarter, and $4.51 per MMBtu in the fourth quarter of 2027.
“In our forecast, the Henry Hub spot price averages almost $3.80 per million British thermal units in 2026, or 13 percent less than our forecast last month,” the EIA said in its latest STEO.
“We reduced our forecast for prices this year largely because of milder than expected weather in February, which led to more natural gas in storage in the coming months in our forecast,” the EIA added.
“We expect prices will rise to about $3.90 per MMBtu on average next year, or 12 percent less than our forecast last month,” it continued.
“Lower prices in 2027 reflect higher natural gas production than in our previous forecast, which raises our expectations of natural gas inventories next year,” the EIA went on to state.
Gas Production, Storage
In its March STEO, the EIA noted that marketed natural gas production in the Lower 48 states reached a record high in November at 118.5 billion cubic feet per day (Bcfpd).
“We estimate production will average 117.8 Bcfpd this winter (November-March), which is two percent more than our October STEO forecast,” the EIA highlighted in the STEO.
“The increased production, stemming primarily from increased associated gas production from the Permian and the rest of the U.S. Lower 48 states regions, offset the temporary drop in production during Winter Storm Fern,” it added.
The EIA noted in its STEO that, in February, production “nearly recovered after the 3.6 Bcfpd decrease in January”, which it said was “concentrated in the Appalachia region (-1.3 Bcfpd) and Permian region (-1.3 Bcfpd)”.
“We expect marketed natural gas production to rise through our forecast period, averaging 118 Bcfpd in 2026 and 121 Bcfpd in 2027, relative to 116 Bcfpd in 2025,” the EIA outlined in its report.
“We expect the growth in natural gas production to originate from the Haynesville, Permian, and Appalachia regions. Elevated oil prices will drive more oil-directed drilling in the Permian, which will contribute to greater volumes of associated natural gas production,” it added.
The EIA went on to state in its March STEO that it expects U.S. natural gas inventories to end the winter season at 1,840 billion cubic feet, “148 Bcf lower than forecasted heading into the winter season in our October 2025 STEO but similar to the five-year (2021–2025) average”.
In January, natural gas stocks dropped to 2,493 Bcf, according to the EIA’s March STEO, which noted that this reflected the “historic withdrawals in response to Winter Storm Fern”.
“Based on data from the National Oceanic and Atmospheric Administration, the 2025–2026 winter season (November-March) will have two percent more heating degree days (HDDs) than the 10-year average and four percent more HDDs compared with the October 2025 STEO forecast,” the EIA said in its STEO.
“Although we have had colder weather that has contributed to record high spot prices, production was higher than expected throughout the winter, which helped dampen the effect of January’s large storage withdrawals, keeping storage levels close to or above average through the winter,” it added.
“We now expect natural gas inventories will end the withdrawal season near the five-year average, whereas in October, we forecast stocks would end the season eight percent above average,” it continued.
Other Price Projections
In a BMI report sent to Rigzone by the Fitch Group on Thursday, BMI analysts projected that the front month Henry Hub natural gas price will average $3.90 per MMBtu in 2026 and $4.00 per MMBtu in 2027.
A Standard Chartered report sent to Rigzone on Wednesday forecast that the NYMEX basis nearby future U.S. natural gas Henry Hub price will average $4.025 per MMBtu this year and $4.400 per MMBtu next year.
To contact the author, email andreas.exarheas@rigzone.com
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