Morgan Stanley has raised its outlook for U.S. natural gas prices, projecting Henry Hub to average $5 per million British thermal units in 2026, about 28% above current futures pricing.
Prices have already started to rebound from late-August lows of around $2.70, after a summer marked by soft demand.
The bank noted that August–September was the coolest in more than a decade, cutting into power sector consumption.
Gas burn for electricity fell 2.6 billion cubic feet per day (bcf/d) in August, down 5% from a year earlier.
Storage stood at 3.3 trillion cubic feet as of August 29, 6% above the five-year average, but inventories are expected to exit March 2026 at 1.7 trillion cubic feet, 7% below average.
“We still expect prices to rise >$5” in the first half of 2026 (1H26), analysts led by Devin McDermott wrote.
On the supply side, production edged higher in August to 107.4 bcf/d but has since rolled lower by 0.8 bcf/d in September, driven by declines in the Haynesville shale.
The gas-directed rig count has fallen by six since the start of August, leaving Haynesville rigs at about 40, around maintenance levels.
Morgan Stanley estimates total U.S. supply growth of 3.9 bcf/d in 2025, short of demand.
LNG exports remain the key driver of demand. Feedgas flows averaged 15.8 bcf/d in August, near record levels, with Plaquemines ramping to 3.3 bcf/d.
Golden Pass is on track to produce its first LNG by year-end, while more than 30 million tonnes per annum of new offtake agreements have been signed this year, extending the export growth runway.
“With little ‘spare capacity’ remaining, we forecast limited supply growth in 2H25 while LNG demand rises, re-tightening the market,” the analysts said.
Looking further ahead, U.S. LNG export capacity is projected to nearly double over the next five years, adding about 14.6 bcf/d of domestic consumption.
The Wall Street giant forecasts inventories to finish October 2025 at 3.90 trillion cubic feet, slightly above its prior estimate, with prices climbing as the supply-demand balance tightens into 2026.
Source :
https://www.investing.com/news/commodities-news/morgan-stanley-refreshes-its-us-natural-gas-prices-outlook-4233295
