Natural Gas Trades at $3.23 as LNG Exports and Storage Drawdown Tighten Supply

Henry Hub natural gas is trading at $3.23/MMBtu, down 3.21% as near-term weather forecasts moderate demand expectations. Despite the daily decline, the gas market is structurally tighter than it was a year ago, driven by a combination of LNG export growth and the depletion of storage inventories during the December 2025 cold snap.

US natural gas prices surged above $5.00/MMBtu in late 2025 following a sharp increase in LNG exports and a deep December cold snap that drew storage inventories well below the five-year average. The rally has moderated in 2026 as winter heating demand subsided, but storage levels remain below historical norms, providing a price floor.

LNG export capacity continues to grow, with new liquefaction trains coming online at existing facilities. US LNG exports averaged approximately 14 bcf/d in 2025, up from 12 bcf/d in 2024, and are expected to reach 15-16 bcf/d in 2026. European demand remains strong as the continent continues to reduce dependence on Russian pipeline gas.

US dry gas production grew approximately 3% in 2025, driven by associated gas from oil-directed drilling in the Permian Basin and pure gas production from the Haynesville and Appalachia basins. However, producer discipline has limited the capital deployed to new gas-directed drilling, constraining supply growth even as prices have recovered.

The EIA's STEO projects Henry Hub averaging $4.30/MMBtu this winter, supported by LNG exports and storage refill demand. For full-year 2026, the EIA forecasts an average near $4.00/MMBtu. Key downside risks include a mild winter and continued production growth; upside risks include another cold snap or further LNG export acceleration.