Natural gas

Natural gas market update
In our forecast, the Henry Hub spot price averages almost $3.80 per million British thermal units (MMBtu) in 2026, or 13% less than our forecast last month. We reduced our forecast for prices this year largely because of milder-than-expected weather in February, which led to more natural gas in storage in the coming months in our forecast. We expect prices will rise to about $3.90/MMBtu on average next year, or 12% less than our forecast last month. Lower prices in 2027 reflect higher natural gas production than in our previous forecast, which raises our expectations of natural gas inventories next year.

Reductions in the flow of liquified natural gas (LNG) through the Strait of Hormuz have caused natural gas prices in Europe and Asia to increase. However, we expect U.S. natural gas prices to be relatively unaffected by this development, as LNG export facilities were already operating at a high level of utilization prior to the Middle East conflict, limiting the ability to export additional volumes in the near term. Most of the flexibility in exports will be in the ramp-up at Corpus Christi State 3 (Train 5), which was completed in February and at Golden Pass Train 1, which is set to come online this month.

Natural gas production
Marketed natural gas production in the Lower 48 states reached a record high in November at 118.5 billion cubic feet per day (Bcf/d), and we estimate production will average 117.8 Bcf/d this winter (November—March), which is 2% more than our October STEO forecast. The increased production, stemming primarily from increased associated gas production from the Permian and the rest of the U.S. Lower 48 states regions, offset the temporary drop in production during Winter Storm Fern. In February, production nearly recovered after the 3.6 Bcf/d decrease in January, which was concentrated in the Appalachia region (-1.3 Bcf/d) and Permian region (-1.3 Bcf/d).

We expect marketed natural gas production to rise through our forecast period, averaging 118 Bcf/d in 2026 and 121 Bcf/d in 2027, relative to 116 Bcf/d in 2025. We expect the growth in natural gas production to originate from the Haynesville, Permian, and Appalachia regions. Elevated oil prices will drive more oil-directed drilling in the Permian, which will contribute to greater volumes of associated natural gas production.

Natural gas stroage
We expect U.S. natural gas inventories to end the winter season at 1,840 billion cubic feet (Bcf), 148 Bcf lower than forecasted heading into the winter season in our October 2025 STEO but similar to the five-year (2021–2025) average. In January, natural gas stocks dropped to 2,493 Bcf, reflecting the historic withdrawals in response to Winter Storm Fern.

Based on data from the National Oceanic and Atmospheric Administration, the 2025–2026 winter season (November–March) will have 2% more heating degree days (HDDs) than the 10-year average and 4% more HDDs compared with the October 2025 STEO forecast. Although we have had colder weather that has contributed to record high spot prices, production was higher than expected throughout the winter, which helped dampen the effect of January’s large storage withdrawals, keeping storage levels close to or above average through the winter.

We now expect natural gas inventories will end the withdrawal season near the five-year average, whereas in October, we forecast stocks would end the season 8% above average. We expect regional inventories to be lower relative to the five-year average in the Midwest (-22%) and East (-21%) regions and close to average in the South Central region, while we expect above-average inventories in the Pacific region (48%) and the Mountain region (50%) as we head into summer.