US Gas Stocks Surge Ahead of Winter as EIA Forecasts Record High Inventories

The Energy Information Administration (EIA) is forecasting that US natural gas inventories will reach their highest level since 2016 by October, providing a buffer ahead of the winter heating season. This forecast is based on strong production levels and lower demand from liquefied natural gas (LNG) export terminals undergoing maintenance. The EIA expects Henry Hub natural gas prices to average $2.87 per million British thermal units (mmBtu) in the third quarter of 2026, a decrease of 50 cents from its previous forecast.

The agency's predictions are influenced by higher production and maintenance at LNG export facilities, which will weigh on domestic gas demand and prices. US LNG exports are forecast to average 16.5 billion cubic feet per day (bcf/d) in the third quarter, with the EIA slightly lowering its forecast due to maintenance at Freeport LNG. However, the agency expects US LNG exports to continue growing through 2027.

The EIA also notes that natural gas production will remain strong, while demand from the power sector is expected to increase as electricity consumption rises. In fact, the agency predicts that natural gas will account for about 40% of US electricity generation in 2026, while coal's share is forecast to fall to 16%. Wind and solar are expected to account for 11% and 8%, respectively.