Henry Hub natural gas edged up 1% on Monday as summer cooling demand began to absorb some of the excess supply. The June 2026 NYMEX contract expired at $3.04 on May 27, and prompt-month futures have been trading in a tight $3.00-3.15 range since.
The EIA's June 2026 Short-Term Energy Outlook projects Henry Hub prices will average $3.34/mmBtu in the second half of 2026. This suggests only moderate upside from current levels, with the EIA noting that supply growth continues to outpace demand.
U.S. dry gas production is at or near record levels, and the EIA has revised 2026 output higher by 0.9% in its latest forecast. Higher crude prices in H1 2026 encouraged more oil drilling in the Permian, boosting associated gas output.
Storage inventories stand at 2.85 trillion cubic feet, 8% above the five-year average for this time of year. The surplus provides a comfortable buffer against summer demand spikes, reducing the probability of a weather-driven price rally.
Natural gas remains well-supplied despite rising cooling demand. Buyers should not hedge at forward premiums above $3.50. The storage surplus and record production cap upside. Consider index-based pricing with basis hedges for winter protection.