L48 Gas Output Growth Holds NYMEX Henry Hub Below $3.10 Despite LNG Disruption Overhang
Expanding Permian and Haynesville supply, combined with record-low California consumption, limits the upside even as Wood Mackenzie warns cheap molecules are running out.
NYMEX Henry Hub front-month held at $3.05 per MMBtu on Wednesday (2026-09-23), up 0.33% on the session, according to live market data. The number looks almost identical to the $2.853 print from early May (2026-05-04), when the front-month was rallying on LNG supply concerns, suggesting four months of event-driven catalysts have collectively moved the benchmark by less than $0.20.2,4
Lower-48 marketed gas production averaged 117.2 Bcf/d in the first quarter of 2026, a 4% increase over the same period in 2025, EIA data showed. The agency's May 2026 Short-Term Energy Outlook projected full-year L48 production rising 3% above 2025 levels, with the Permian Basin supplying the bulk of new molecules at a forecast 29.2 Bcf/d, up 6% year-on-year, and Haynesville expected to grow 6% in 2026 and 8% in 2027.1
Wood Mackenzie noted that Henry Hub remains a localised benchmark shaped by supply, demand, and infrastructure conditions in southern Louisiana, which means output gains from both formations feed directly into the settlement price.5
California adds a separate layer of pressure. Monthly average spot prices in the state reached record lows across the first five months of 2026, dropping to values last seen during the nationwide low-price market of 2024, EIA data showed. Statewide consumption hit 4.8 Bcf/d in 2025, a record low and 7% below 2024's already-weak figure. Pacific region storage ended the week of May 22, 2026 at 30.9%, or 69 Bcf, above its five-year average — a surplus that had been running more than 10% above the five-year average since the first week of December 2025.3
Henry Hub closed the week ending May 11, 2026 at $2.67 per MMBtu, a glut-level reading even while Qatar's LNG facilities remained partially offline, 247WallSt reported. The fact that the benchmark could not sustain a significant premium with a major LNG exporter disrupted underlines how much the domestic supply base has expanded.2
The EIA did raise its Henry Hub price forecasts for 2026 and 2027 in its July 2026 STEO, citing tightening LNG demand as an upside variable. But EBW Analytics Group analyst Eli Rubin, writing in a note distributed to Rigzone, warned that milder weather was undermining near-term fundamentals.6
Wood Mackenzie's longer view pulls in the other direction from the short-term overhang. The consultancy warned in July 2026 that a decade of near-zero marginal cost U.S. gas supply was ending. Analyst Wang projected the share of low-cost supply would fall below 20% over the next ten years, requiring prices to go higher and stay higher to attract new molecules. The production growth already underway complicates the timing of any price response to that cost shift.5
None of this has been kind to leveraged ETF holders. ProShares Ultra Bloomberg Natural Gas was trading around $13 as of July 8, 2026, down 43% year-to-date and 80% over the prior twelve months, 247WallSt reported. A Seeking Alpha analysis cited in the same piece put the product's annualised return at negative 41% over ten years, driven by daily leverage resets and roll costs in a structurally contangoed futures market. The five-year loss exceeds 99%.2
January 2026 showed that the trade can still work in extreme circumstances. One publication reported BOIL jumped 65% in a single week during that cold snap, with NYMEX Henry Hub front-month contracts posting a 125% rise over four sessions before reversing sharply.2
First Trust Natural Gas ETF holds gas company equities rather than futures, making it less exposed to roll decay and daily rebalancing costs, though it moves with broader equity market trends and company-specific risks rather than tracking spot gas prices directly, The Motley Fool noted in a July 2026 analysis.7
With Permian output set to grow another 10% in 2027 per EIA forecasts, Pacific region storage still running nearly 31% above its five-year average as of late May, and EBW flagging mild weather as a near-term drag, the EIA's upward price revisions look more like a medium-term call than an imminent market signal.1,3,6 The variable worth watching through October injection season is whether weekly EIA storage reports show the Pacific surplus compressing or holding, since a persistent overhang going into winter would mean the supply cost inflection Wood Mackenzie describes remains a 2027 story at the earliest.5,3