US Natural Gas Holds Near $3 as AI Data Centers and LNG Exports Begin Eroding a Decade of Surplus
Wood Mackenzie forecasts Henry Hub at $5/MMBtu by 2035, with AI power demand and LNG exports pulling against oil-linked supply growth.
NYMEX Henry Hub front-month stood at $2.93 per million Btu as of 2026-09-01, holding just above the $2.801 level reached on August 10 (2026-08-10), when the largest intraday surge in more than two months burned a large speculative short. Bloomberg reported that day that money managers had built their most bearish position in US gas since 2020, leaving the market exposed when an unusually large swing in weather forecasts triggered covering. September delivery futures rose as much as 5.2% within a single session.3
The covering cleared some air but resolved little structurally. Wood Mackenzie analysts, in a report published in early July (2026-07-05), argued that a decade of low Henry Hub prices is ending and that the market is moving toward a sustained rise, with prices approaching $5 per million Btu by 2035. Two forces drive that view: the buildout of US LNG export infrastructure, which redirects domestic volumes into global markets, and the rapid expansion of AI data center capacity, which requires dispatchable gas-fired generation at a scale that renewables alone cannot yet fill.2
The supply side complicates matters. US gas production is not independent of oil markets. A significant share of output is associated gas produced alongside crude oil. With ICE Brent crude front-month at $91.33 per barrel and NYMEX WTI crude front-month at $86.43 per barrel as of 2026-09-01, oil economics remain supportive of drilling, which in turn sustains associated gas output and mutes the price signal that would otherwise encourage dedicated gas investment.2
This oil-gas linkage is visible in the historical record. Wood Mackenzie noted that Henry Hub remained suppressed for most of the past decade precisely because shale oil drilling flooded domestic supply with gas it was not specifically targeting. The AI and LNG demand story does not invalidate that mechanism; it argues that demand growth will eventually outpace what associated production can supply. That margin is what traders and analysts are debating now.2
Short-covering events have a way of overstating momentum. Bloomberg reported that in spring 2024, when US gas markets were historically oversupplied and speculative shorts had accumulated heavily, a 288,000-contract covering event pushed futures by nearly $1 per million Btu. The January 2026 winter storm provided a more extreme case: a production disruption and demand surge sent futures 75% higher in just three days.3 Both moves reversed as supply normalized. The August 10 (2026-08-10) episode follows a similar pattern — weather-driven, short-lived, and now largely absorbed by a market that has returned to the low-$2.90s range.3
Still, the structural demand argument is directionally harder to dismiss than it was two years ago. US LNG export capacity has grown materially, and the power demand from data centers is a multi-year buildout, not a seasonal fluctuation. Wood Mackenzie's view that prices will rise through 2035 rests not on a single catalyst but on the cumulative weight of several simultaneous shifts in end-use demand.2
Crude markets as of 2026-09-01 offered no fresh concern on the supply side. NYMEX WTI front-month slipped 0.74% on the session while ICE Brent front-month held near flat. Neither move suggests imminent cuts to oil-directed drilling. But a sustained decline in crude — toward the $79.85 per barrel level where ICE Brent settled following US-Iran ceasefire developments on June 18 (2026-06-18) — would reduce associated gas output and could accelerate the tightening Wood Mackenzie describes.2,1
Wood Mackenzie's $5 target sits nine years out, and the history of US gas price forecasting is not encouraging for long-range precision. Short positions have repeatedly rebuilt after previous squeezes, and the market can carry heavy supply for extended periods when oil drilling remains active. For the remainder of 2026, the more immediate signals are whether new LNG train completions and data center power-purchase agreements arrive on schedule — because delays in either would give bears new ammunition to rebuild positions against a market that, for now, remains range-bound just below three dollars.2,3