EIA sees Henry Hub prices easing in 2026 before sharp rebound in 2027

U.S. benchmark natural gas prices are expected to ease slightly in 2026 before rising sharply in 2027 as demand growth—driven largely by liquefied natural gas (LNG) exports—outpaces supply, according to the U.S. Energy Information Administration’s (EIA) January Short-Term Energy Outlook (STEO).

The EIA forecasts the Henry Hub spot price will decline about 2% in 2026 to just under $3.50 per million British thermal units (MMBtu), before increasing roughly 33% in 2027 to just under $4.60/MMBtu. The outlook reflects a near-term balance between supply and demand, followed by a tighter market as new LNG export capacity ramps up.

In 2026, the EIA expects annual average prices to edge lower as natural gas supply growth keeps pace with demand growth over the year. Supply is forecast to increase by nearly 1%—or about 1.1 billion cubic feet per day (Bcf/d)—while total demand, including exports, rises by less than 1%, or about 0.6 Bcf/d. That leaves supply growth exceeding demand growth by roughly 0.5 Bcf/d, applying modest downward pressure on prices.

That balance shifts decisively in 2027. The EIA projects demand growth of 2.5 Bcf/d, far outstripping supply growth of 0.9 Bcf/d, a swing that places upward pressure on prices and reduces the amount of natural gas available for storage.

LNG exports drive demand growth

The primary driver behind stronger demand growth is LNG exports. The EIA forecasts U.S. LNG exports will increase 9% (1.3 Bcf/d) in 2026 and 11% (1.7 Bcf/d) in 2027, reflecting the ramp-up of three major export projects: Plaquemines LNG, Corpus Christi Stage 3 and Golden Pass LNG.

Plaquemines LNG and Corpus Christi Stage 3 are expected to continue ramping up toward full operations during the forecast period, while Golden Pass LNG is projected to begin operations in 2026. As these facilities increase feed gas demand, they are expected to materially tighten the U.S. natural gas balance.

Outside of exports, overall U.S. natural gas consumption is expected to remain relatively flat across the two-year outlook. Declines in the residential, commercial and industrial sectors are largely offset by rising demand from the electric power sector.

The EIA forecasts residential and commercial natural gas consumption will decline 4% in 2026 to 22.1 Bcf/d. That decrease reflects a return to closer-to-normal weather following colder-than-normal conditions in parts of 2025, which boosted heating demand.

Industrial sector consumption is also forecast to decline in both 2026 and 2027, driven by reduced industrial activity and milder weather conditions. The EIA measures this trend using its natural gas-weighted manufacturing index.

In contrast, natural gas consumption for electric power generation is expected to increase steadily throughout the forecast period. The EIA cites continued reliance on natural gas-fired generation to meet load growth and to balance intermittent renewable generation as key factors supporting power-sector demand.

Storage levels tighten, lifting prices

As demand begins to outpace supply in 2027, the EIA expects U.S. natural gas storage inventories to trend lower, moving gradually below the rolling five-year average. Storage levels had been relatively strong in recent years, with inventories ending December 2025 about 1.7% above the 2020–24 five-year average.

Historically, periods of higher-than-average inventories have been associated with lower natural gas prices, while tighter storage levels tend to coincide with higher prices and more constrained market conditions. As inventories fall closer to—or below—the five-year average, the EIA expects upward pressure on Henry Hub prices to intensify.