Natural gas posts fourth consecutive weekly loss
The May Henry Hub contract fell 13c this week, sliding below $3/MMBtu to settle at $2.80/MMBtu. The rest of the forward curve weakened as well, with the Winter ‘26/’27 seasonal strip falling 21c to $4.13/MMBtu and Summer ’27 down 13c to $3.34/MMBtu. Winter ‘27/’28 gave up gains made during the month of March, losing 14c to settle at $4.20/MMBtu. The near-term demand outlook continues to look particularly weak, although supportive signs are emerging from the Golden Pass LNG export plant.
With this week marking the start of April and the end of the Winter 25/’26 season, weather will have a relatively more limited impact on gas demand until electricity demand begins rising this summer. However, weather forecasts for April look very bearish for gas demand. Commodity Weather Group expects April 2026 to have 265 gas-weighted heating degree days, which would make it the warmest April on record. This compares to the ten-year average of 338 HDDs, and the record coldest being 1975, with 493 HDDs. While the variance between a very cold and very warm April is not particularly wide, the weak demand outlook is still weighing on gas prices, especially after a relatively mild March.
Outside of weather, supportive signs are emerging from Golden Pass LNG, with feedgas rising and cargo loadings nearby. Over the course of this week, Golden Pass requested and received approval from FERC to begin loading cargos of LNG. Meanwhile, gas flows into the plant reached a record level of nearly 450 MMCf/d on Thursday, out of a total Train 1 capacity of 790 MMcf/d. With cargo loadings approved, the ramp up of Train 1 may be more consistent going forward, compared to the volatility seen in feedgas flows so far. Golden Pass Train 2 will begin commissioning later this year, followed by Train 3 in the first quarter of 2027. This combined with the ramp up of Corpus Christi Stage Three expansion will support LNG feedgas demand throughout 2026.
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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