El Nino and Record US Gas Production Weigh on Winter Prices
US natural gas prices are expected to be lower this winter compared to last year, due to a strong El Nino weather pattern and record supply levels. According to analysts, a mild winter will reduce residential and commercial demand for gas, while ample production and storage will keep inventories well-balanced.
The Henry Hub spot price, which serves as a benchmark for US natural gas prices, averaged $2.93 per million British thermal units (mmBtu) from June through August, 6% below the same period last year. Analysts expect prices to remain low this winter, with Zhen Zhu of C.H. Guernsey and Company predicting an average price of around $3.50 per mmBtu from December through February.
US gas production is on track to reach record levels for a second year in a row, up about 4% from the current annual all-time high of 107.6 billion cubic feet per day (bcfd) in 2025. This surplus will help keep prices low, despite weaker heating demand due to El Nino.
However, growing domestic and export demand is expected to absorb some of the additional supply, limiting the downside for prices. U.S. LNG exports are expected to average 1.5-2.0 bcfd above last winter, while rising electricity consumption could boost power-sector gas demand by another 0.5-1.0 bcfd.