US Gas Production Growth Caps Henry Hub as Global Prices Diverge
NYMEX front-month holds near $3.25 as Permian and Haynesville output expands faster than LNG export demand can absorb.
NYMEX Henry Hub front-month closed at $3.25 per million British thermal units on Friday (2026-07-03), a price shaped largely by rising domestic supply rather than any tightening of the US gas balance. EIA data showed Lower 48 marketed natural gas output averaged 117.2 billion cubic feet per day in the first quarter of 2026, up 4% from the same period in 2025, and the agency forecasts a further 3% gain for the full year.2
The production trajectory explains much of Henry Hub's detachment from international gas prices. ICE Endex TTF front-month was trading at €45.33 as of Friday's (2026-07-03) European close while JKM spot settled at $16.07 per MMBtu — benchmarks that reflect the supply disruption that followed the February 2026 Strait of Hormuz closure, which affected nearly 20% of global LNG supply and pushed European and Asian prices to their highest levels since the 2022/23 gas crisis.5
US domestic supply growth has been sufficient to absorb the demand increment from expanding LNG exports before it reaches Henry Hub pricing. Output in the Lower 48 rose from approximately 109 Bcf/d through 2025 to 117.2 Bcf/d in early 2026, with the Permian Basin and the Haynesville shale responsible for most of the increase.2,3
EIA projects the Permian will produce 29.2 Bcf/d this year, 6% above 2025 levels, with a further 10% increase expected in 2027 as pipeline bottlenecks that currently constrain takeaway capacity are resolved. Haynesville — where producers drill primarily for gas rather than associated crude liquids — is forecast to grow 6% in 2026 and 8% next year, faster on a percentage basis than the oil-weighted Permian.2
LNG export volumes have provided some support to Henry Hub, but not enough to shift the domestic balance. Weekly vessel departures reached 141 Bcf in the week of May 15 (2026), up 26 Bcf from the prior week despite maintenance at several Gulf Coast export facilities. NYMEX June front-month recovered to $2.96 per MMBtu on Friday (2026-05-15), up 7.4% on the week, with the gains attributed primarily to stronger power-sector demand expectations during the early cooling season rather than to export tightening.1
The move from spring lows to current levels illustrates the range the market has been working within. Henry Hub traded at $2.67 per MMBtu in the week of May 11 (2026), a price one market analysis characterised as "glut-level even with the world's largest LNG exporter still partially offline" — Qatar's output was reduced during the Hormuz disruption — indicating that US domestic supply growth had already offset the export demand pull before it reached domestic pricing.4
Forecasts for the second half of 2026 vary. EIA's base case puts the 2026 annual average just under $3.50 per MMBtu. Morgan Stanley has projected prices could climb to $5 per MMBtu, a scenario that would require summer cooling demand to outperform seasonal norms and LNG export ramp-ups to continue without the production offset that has characterised the first half of the year.3
The supply argument is built into Haynesville's drilling economics. Unlike Permian producers, whose investment decisions are driven primarily by crude oil returns, Haynesville operators drill predominantly for gas and respond more directly to Henry Hub pricing. If futures sustain above $3.50, the rig count in Haynesville is likely to rise — adding supply in the same range where the Morgan Stanley scenario requires demand to dominate. Permian takeaway expansion expected later in 2026 would add to that supply pressure, leaving the ceiling on Henry Hub closer to EIA's base case than to the more optimistic forecasts.2