US dry natural gas production has plateaued at 103.5 Bcf/d, 1.7 Bcf/d below the December 2025 peak of 105.2 Bcf/d, as producer discipline constrains new supply. The gas-directed rig count has stabilized at 98 rigs, up slightly from 96 in Q1 but still well below the 2023 average of 120.
The decline in associated gas production from oil-directed wells is a key factor. As WTI crude has fallen from $85/bbl in April to $73/bbl currently, oil-directed drilling activity has moderated. The Permian Basin, which contributes 35% of US gas output via associated gas, has seen rig counts fall 8% in Q2 2026.
Permian associated gas production averaged 24.5 Bcf/d in May, down 1.2 Bcf/d from the Q1 2026 high. The reduction is driven both by lower oil-directed drilling and by producers electing to cap marginal wells rather than sell gas at sub-$3.00 prices.
The Appalachian Basin (Marcellus/Utica) has been more stable at 35.8 Bcf/d, but pipeline constraints continue to limit incremental flows to Gulf Coast LNG terminals. The Mountain Valley Pipeline expansion — now in service — added 2.0 Bcf/d of takeaway capacity, which was quickly absorbed by existing production.
The production plateau is real and structural. Supply growth has stalled after 18 months of expansion. Budget for $3.00–3.50 as the new normal for Henry Hub in H2 2026. The days of sub-$2.50 gas are unlikely to return until oil-directed drilling picks up significantly.