New England Gas at Record Discount to Henry Hub as US Supply Surge Hits Pipeline Bottleneck
NYMEX Henry Hub front-month at $2.85/MMBtu and Lower-48 output up 4% year-on-year are keeping New England basis near historic lows, with pipeline constraints providing no near-term relief.
New England natural gas prices have been trading near record discounts to NYMEX Henry Hub front-month, which stood at $2.85/MMBtu on Wednesday (2026-09-09). That price sits well below the just-under $3.50/MMBtu full-year average the EIA projected in May 2026, a forecast the agency has since cut further. Both the regional spread and the national benchmark reflect supply running comfortably ahead of demand.3,6
Lower-48 marketed natural gas production averaged 117.2 billion cubic feet per day in the first quarter of 2026, up 4% from the same period in 2025, according to EIA data. The EIA forecasts full-year 2026 output will rise 3% versus 2025. These are not seasonal fluctuations. They are structural additions to a market already running long on inventory.2
That volume has to clear somewhere. In the week of May 18, 2026, Enbridge launched an open season to expand its Algonquin natural gas transmission system to better serve New England demand, Natural Gas Intelligence reported. The proposal revives an earlier initiative that had stalled in regulatory cycles. The move signals how unresolved the region's pipeline access problem remains, even as national supply builds season after season.4
The infrastructure constraint cuts both ways. The limited number of interstate pipelines serving New England drives dramatic winter price spikes when cold weather strains import capacity. But when demand softens and supply is abundant, that same bottleneck instead strands low-cost molecules at a discount — and expanding capacity is a process measured in years, not months.4
Supply growth is concentrated in basins distant from New England. The Permian region is expected to produce 29.2 Bcf/d in 2026, the EIA projects, 6% above 2025 levels, with an additional 10% growth pencilled in for 2027. Haynesville, a gas-dominant play better positioned to serve Gulf Coast and LNG export markets, is forecast to grow 6% this year and 8% next. These incremental volumes compress Henry Hub; they do not fix New England's access problem.2
The EIA's August 2026 short-term energy outlook lowered Henry Hub price forecasts for both 2026 and 2027. EBW Analytics Group analyst Eli Rubin, writing for Rigzone after the release, cited record daily production and softening weather demand as the twin drivers.6 U.S. working gas inventories were 141 Bcf above year-ago levels in late May 2026 data, with a weekly withdrawal of 52 Bcf coming in well below the five-year seasonal average of 168 Bcf.1
Wood Mackenzie warned in July 2026 that the share of near-zero marginal cost supply growth in the U.S. is expected to fall below 20% over the next decade, requiring structurally higher prices to bring new molecules to market. Henry Hub, the firm noted, remains a localised benchmark shaped by conditions in southern Louisiana. Whether New England's extreme basis discount eventually narrows depends less on the long-run Henry Hub trajectory than on whether pipeline capacity into the region expands materially before the next cold-weather demand cycle tightens.5
Forecasters diverge sharply on the national benchmark itself. The EIA projects Henry Hub averaging just under $3.50/MMBtu for 2026, while Morgan Stanley has suggested prices could surge to $5/MMBtu, according to NAGA.3 At $2.85/MMBtu on Wednesday (2026-09-09), the market is tracking near the EIA's lower range, leaving New England discounts firmly in place.
For basis traders, the immediate signal is whether Enbridge's Algonquin open season advances to binding commitments and a FERC filing. The system's proposed expansion has stalled before. Winter 2026-27 will arrive before any new pipe could be operational, and the region's congested import infrastructure has not changed.4