EIA Raises Henry Hub Forecasts for 2026 and 2027 as LNG Demand Absorbs Output Surge
The agency's upward revision pits record Permian production against growing LNG export appetite, leaving spot prices below the agency's own revised expectations.
The U.S. Energy Information Administration lifted its Henry Hub spot price forecasts for 2026 and 2027 in its June short-term energy outlook, signalling that surging domestic gas production is being absorbed by LNG export demand faster than storage builds can suppress prices. NYMEX Henry Hub front-month was trading at $3.25 per million British thermal units as of the July 4 (2026-07-04) session, still below the threshold the agency now considers a reasonable full-year average.6
That gap between spot and forecast reveals the central tension in U.S. gas markets this summer. The EIA had already expected Henry Hub to average just under $3.50/MMBtu for full-year 2026, and the June revision pushed that view higher, driven by projections that export capacity will run near maximum utilisation through the injection season.2,6
On the supply side, Lower-48 marketed gas production averaged 117.2 billion cubic feet per day in the first quarter of 2026, up 4% from the same period in 2025, the EIA's May short-term outlook showed. A subsequent June estimate put 1Q26 output at 120.2 Bcf/d, reflecting upward revisions between consecutive monthly reports. Both readings confirm a supply trend that would ordinarily press prices lower.1,5
The agency's production forecast compounds the picture. The EIA projects full-year 2026 Lower-48 production to increase 3% against 2025 levels, with the Permian Basin — already producing 29.2 Bcf/d this year, up 6% from 2025 — doing most of the heavy lifting. Pipeline constraints in the Permian are expected to ease into 2027, when the EIA forecasts a further 10% expansion from the region. The Haynesville shale in Louisiana and East Texas is projected to add 6% this year and 8% next.1
Rising supply alone does not dictate lower prices if the demand side grows at a comparable pace. The EIA's upward revision rests on a view that LNG export terminals are operating near capacity, pulling incremental Permian and Haynesville volumes offshore before they can accumulate as storage surpluses. Morgan Stanley has argued that prices could reach $5/MMBtu in a scenario where summer cooling demand and LNG export runs operate simultaneously at full stretch — a plausible outcome given the pace at which new terminals have come online.2
The Atlantic trade route reinforces the export case. ICE Endex TTF front-month gas settled at €45.33 per megawatt-hour as of July 4 (2026-07-04), while NBP front-month UK gas stood at €43.14 at Friday morning's (2026-07-04) close. At those European hub levels, the transatlantic spread makes U.S. LNG cargoes commercially attractive, sustaining incentives for American export terminals to keep loading through the summer.4,3
The downside scenario is simpler. ICE Brent crude front-month sat at $72.12 per barrel as of the July 4 (2026-07-04) session, with WTI at $68.78. Permian associated gas — produced alongside crude oil — follows drilling economics. A sustained decline in crude prices would slow Permian well completions, cutting associated gas supply faster than the EIA's forecast assumes, which would tighten L48 balances regardless of LNG demand.5
Storage data add a further variable. The EIA reported U.S. gas inventories at 2,070 billion cubic feet as of 13 February (2026) — down 144 Bcf week-on-week, running 2.8% below the year-earlier level and 5.6% below the five-year average. How much of that winter deficit has been rebuilt through spring injection will determine the buffer available if summer cooling demand proves strong.3
The EIA has placed its revised forecast above where spot currently trades. Whether that gap closes from below — prices rising toward the forecast — or from above, with the agency walking back its view in subsequent months, depends on August injection reports and whether LNG export terminals sustain their current run rates through the end of the third quarter.