Henry Hub natural gas prices have firmed to $3.22/MMBtu, supported by rising summer cooling demand that is boosting power-sector gas burn. The EIA's latest Short-Term Energy Outlook reports that the Henry Hub spot price averaged $2.94/MMBtu in May, up $0.17 from April, and expects further gains as temperatures rise across major population centers.
U.S. dry natural gas production averaged approximately 108.8 Bcf/d in early June, a slight decline from May's 109.7 Bcf/d but still at elevated levels. Production growth remains concentrated in the Permian Basin (associated gas from oil drilling), Appalachia, and the Haynesville shale. Despite moderated drilling activity due to earlier low prices, associated gas from record oil production continues to boost overall supply.
Storage inventories stand at approximately 5% above the five-year seasonal average, a level that traders describe as 'broadly comfortable' heading into the peak summer demand season. However, if above-normal temperatures persist through late June and July, cooling demand could draw down this storage surplus quickly, creating upside price risk for late summer contracts.
The EIA has revised its production outlook upward, which has shifted its 2026–2027 price curve lower relative to earlier forecasts. However, the agency also expects higher power-sector consumption to offset some of the additional supply, maintaining a broadly balanced market outlook for the remainder of the year.
Summer prices at $3.22/MMBtu are manageable for most buyers, but the storage surplus is only 5% above average — one hot summer month could erase it. Consider locking in August–September baseload at current forward curves, as injection season demand and LNG export recovery could lift prices toward $3.50–$4.00 by late Q3.