Henry Hub natural gas futures fell 3.21% to $3.229/MMBtu on NYMEX Monday, continuing a soft open to the injection season. The EIA's April STEO projects a 2026 average Henry Hub price of $3.67/MMBtu, trimmed from $3.80 in the March forecast, as milder winter weather left more gas in storage than anticipated.
End-of-season storage inventories stood 1.7% above the 2020-2024 five-year average, providing a comfortable buffer heading into summer injection season. The EIA expects prices in Q2-Q3 2026 to be closely aligned with year-ago levels, with only a slight decline year-over-year as supply growth (+1.1 Bcf/d) modestly outpaces demand growth (+0.6 Bcf/d).
US dry gas production remains robust at 106-107 Bcf/d, slightly below the record peaks near 109 Bcf/d but still historically high. Associated gas from Permian Basin oil drilling provides a steady supply tailwind, as higher oil prices incentivize drilling that generates associated gas output. This 'free' associated gas constrains Henry Hub even as LNG demand grows.
LNG exports remain the primary demand growth driver, with new liquefaction capacity coming online at Plaquemines Phase 2 and Corpus Christi Stage 3. However, the incremental LNG demand is being met by associated gas from the Permian, limiting the bullish price impact. The EIA sees LNG as a structural support but not a catalyst for a sustained price breakout in 2026.
The ample storage and steady production growth argue for a range-bound market through Q3 2026. For procurement teams, the EIA's $3.50-3.67/MMBtu forecast provides a reliable planning assumption. Cover H2 requirements via monthly index pricing rather than fixed, and watch for injection season pullbacks to the $2.80-3.00 range as buying opportunities for winter hedge positions.