Natural gas prices slide for a second week
The April Henry Hub contract fell 2c to $3.11/MMBtu, extending losses from last week. However, losses were limited to the front of the curve, as Winter ‘26/’27 gained 9c to settle at $4.52/MMBtu and Summer ’27 settled 6c higher at $3.52/MMBtu. This brings prices for next winter and next summer to the highest level since early February, despite the relative weakness in the front of the curve.
The EIA reported the first storage injection of 2026 this week, although consistent storage builds have not yet begun. A build of 35 Bcf was reported for the week ending March 13, with warm Lower-48 temperatures driving gas demand low enough to result in storage injections. Next week’s EIA report will show a withdrawal from storage, although it will likely be the last withdrawal of the current winter season. This should put Lower-48 inventories around 1.84 Tcf ahead of the start of summer, essentially on top of the five-year average.
While total Lower-48 inventories are now at a 47 Bcf surplus to the five-year average, regionally the picture looks very different. Inventories in the East, Midwest, and South Central are all below average. Inventories in the Mountain and Pacific regions are well-above average, resulting in Lower-48 inventories looking balanced. The disparity is due to abnormally warm temperatures in the western half of the country reducing gas demand, while the eastern half saw relatively high demand this winter.
Going forward this year, LNG feedgas demand is expected to continue to grow year-over-year, reaching more than 22 bcf/d by the end of 2026. Gas production, which has so far been relatively flat, will need to move substantially higher by the end of the year. This may require higher prices to encourage increased production.
Natural Gas Factors
Price Trend. (Bearish, Priced In) The March Henry Hub contract has trended lower over the last few weeks as the near-term demand outlook turned less bullish. The contract fell below $3/MMbtu this week, down about $1.50 from the highs seen in late January.
Storage Level. (Bearish, Priced In) The storage level is a bearish priced-in factor due to the high levels of gas in inventories relative to the five-year average. According to the latest EIA weekly natural gas inventory report, Lower-48 storage is now at a deficit of -123 Bcf to the five-year average and 59 Bcf lower than last year.
Associated Gas Production.(Bearish, Priced In) Growth in associated gas production will be much slower than has beeen seen over the past few years, at least until the second half of 2026. Pipeline capacity out of the Permian Basin will begin to grow again next year, likely filling relatively quickly. These new Permian pipes should enter servicce around the same time as projects which will reroute gas around Houston, towards the border of Louisiana.
LNG Outages. (Bearish, Surprise) Feed-gas levels are at their near max capacity, and if there's any unplanned maintenance event or an outage, it may act as a surprise bearish factor for natural gas prices.
Slow Supply Response (Haynesville). (Bullish, Surprise) If production remains near where it is currently and does not grow into winter, this would be a bullish factor for gas prices. As production growth in the Permian and Northeast should be relatively constrained by pipeline capacity until the second half of 2026, the Haynesville will likely be the primary engine of production growth in the near-term. After being flat through most of 2025, Haynesville production and drilling activity has begun to increase this summer. Production is now up about 1.5 Bcf/d from the start of the year, but remains down from levels seen two years ago.
LNG Schedule. (Bullish, Mostly Priced In) With a significant amount of new LNG feedgas demand coming this year and the next few years, if these facilities startup sooner than anticipated it should be a bullish factor for gas prices. One example of this occuring is the recent startup of Plaquemines LNG, which saw feedgas levels reach more than 1 Bcf/d much sooner than anticipated.
2H26 Permian Pipes. Pipeline capacity out of the Permian is set to expand later this year, unlocking more gas supply. If the new Blackcomb pipeline fills quicker than expected, this could pose a bearish surprise to gas prices.
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