Natural gas holds above $3 as AI power demand orders underwrite fragile bull case
NYMEX Henry Hub has maintained $3-plus levels through bearish EIA storage data on the strength of data centre power contracts and LNG export throughput.
NYMEX Henry Hub front-month was trading at $3.24 per million British thermal units on Friday (2026-07-03), down fractionally on the day but holding well above the $2.96 level where June futures settled in mid-May (2026-05-15). The resilience in the face of bearish near-term fundamentals reflects how thoroughly the AI data centre narrative has reframed longer-term demand expectations for US natural gas.2,4
That reframing showed up in corporate order books as recently as last month (May 2026). Babcock & Wilcox, an industrial power generation equipment maker pivoting toward data centre baseload, announced a $2.4 billion design-build contract with Base Electron for 1.2 gigawatts of natural gas-fired capacity, driving its backlog up 470% to $2.8 billion. Management guided 2026 core adjusted EBITDA to between $70 million and $85 million, roughly 80% above the prior year, excluding any data centre upside.1
The orders reflect a straightforward calculation: energy-intensive data centres need baseload power on timelines that renewable capacity cannot reliably meet, and gas is the default. Base Electron is evaluating an additional 1.2 GW option, and Babcock & Wilcox's global pipeline stands above $12 billion. That scale of committed demand pipeline has given gas equities and futures a floor even as the spot picture remains complicated.1
The complicated picture came from EIA storage data. Higher-than-expected injections sent futures lower in mid-May (week of 2026-05-11), with June Nymex natural gas easing from a spike of $2.582 before recovering to close at $2.96, a 7.4% gain for the week. The injection was significantly above both analyst expectations and the five-year average, putting pressure on market sentiment even as the bulls held their positions.4,2
That pattern — sentiment-driven buying checked by the weekly EIA number — captures the tension running through US gas markets on Friday (2026-07-03). AI-related demand expectations and strong LNG export throughput support the bull thesis. But storage builds above seasonal trend cap how far futures can rally on any given catalyst.
LNG exports provided genuine support. Weekly vessel departures reached 141 billion cubic feet during the week of May 11 (2026-05-11), up 26 billion cubic feet from the prior week despite maintenance activity at several export facilities. That export demand underpinned gas consumption even as domestic power burn remained sensitive to actual temperature outcomes.2
The broader energy complex was softer on Friday (2026-07-03). ICE Brent crude front-month fell to $71.42, down 0.71% on the day, with NYMEX WTI front-month at $68.20. A Bloomberg Intelligence survey of 126 asset managers and energy market strategists, conducted in May (2026-05-21), found more than 40% expected demand destruction to be the primary market-balancing force, rather than supply adjustment. Twenty-one percent cited re-routing and logistics adjustments, and 13% looked to OPEC+ spare capacity and policy response. Twelve percent of respondents said nothing would materially offset a significant supply disruption.3
The same survey found respondents expected ICE Brent crude front-month to average between $81 and $100 per barrel over the next 12 months, implying a recovery from current levels — but the range is wide, suggesting low conviction on the timing and drivers of any rally.3
The IEA's World Energy Outlook 2025, released in May (2026-05-20), positioned the AI power surge as a structural complication for energy security planning, not simply an incremental demand boost. Faster-than-expected technology adoption cycles can render near-term supply forecasts obsolete quickly. For gas markets, that uncertainty cuts both ways: it sustains the bull case even through bearish storage prints, but it also means any demand forecast revision carries asymmetric risk.5
That fragility is written into the equity story too. Babcock & Wilcox shares rose 129% year-to-date through late May (2026-05-21), yet the company carried stockholders' equity of negative $131.5 million and faces a 6.50% note refinancing due in 2026. The AI power demand pipeline is large and growing. Whether the physical build-out and the balance sheet can hold together long enough to convert it is the test that matters most for the gas market's next leg.1