Wood Mackenzie Says the Era of Cheap Henry Hub Gas Is Ending
A WoodMac warning that US gas supply is losing its price elasticity lands with NYMEX front-month near $2.94, framing a structurally tighter decade ahead.
Wood Mackenzie warned on Tuesday (2026-07-08) that a decade of cheap Henry Hub gas is coming to an end, arguing that the low-cost supply cushion which held US prices down is thinning fast. The consultancy said the share of gas that grew over the past decade at near-zero marginal cost is expected to fall below 20 percent over the next ten years.7
The claim matters for anyone modelling US power burn and LNG feedgas costs off a benchmark that has spent years pinned near $3. With supply less responsive to price signals than before, WoodMac's Wang said prices will need to go higher and stay higher to pull new molecules to market. NYMEX Henry Hub front-month settled near $2.94 per million British thermal units on Friday (2026-07-10), still deep in the range WoodMac now calls unsustainable over the longer run.7
That reading sits against a benchmark WoodMac itself describes as parochial. Henry Hub, the consultancy noted, remains a localised marker shaped by supply, demand and infrastructure conditions in southern Louisiana, not a global clearing price. The distinction cuts both ways: tightness can build regionally even as the US stays a low-cost exporter relative to TTF and JKM.7
The near-term tape tells a gentler story. Front-month gas rallied through mid-May, with June NYMEX natural gas settling at $2.96 on Friday (2026-05-15), up 2.3 percent on the day and about 7.4 percent on the week, according to reporting collated by TradingView and Yahoo Finance. The move rode expectations of hotter weather, firmer power-sector demand and steady LNG exports.1,3
Export flows underpinned that bid. Weekly vessel departures reached 141 billion cubic feet in the week to 15 May, up 26 Bcf from the prior week, even with maintenance running at several export facilities. LNG feedgas demand has become the swing pull on US balances, and its resilience through turnaround season is part of why the front of the curve firmed despite ample production.1,2
Supply is still growing, which complicates the tightening case. The EIA expects US production to rise about 1 percent this year to almost 109 billion cubic feet a day, near the record set in 2025. A market adding volume at that pace does not obviously need higher prices in the coming months. WoodMac's point is about the marginal molecule a decade out, not next month's balance, and traders should keep the two horizons separate.4,7
Forecasts for 2026 span a wide band. The EIA sees Henry Hub averaging just under $3.50 per MMBtu this year, while Morgan Stanley has flagged a path toward $5 if demand climbs and supply stays disciplined. US electricity generation is expected to rise 1.7 percent in 2026, adding a demand leg that power-burn bulls lean on.4,6
The bullish case is not confined to the US curve. A firmer Henry Hub raises the gas-generation cost stack across ERCOT, PJM and ISO-New England, feeding through to summer power prices in the regions most exposed to gas-fired marginal units. That linkage is why a Louisiana benchmark still moves screens well beyond the Gulf Coast.7
Skeptics have the near-term data on their side. Global gas prices diverged through mid-May, with US Henry Hub easing after smaller-than-expected storage withdrawals even as Asian JKM held firm on post-winter buying, Global LNG Hub reported. Storage that refuses to draw and production near records are not the raw material of a price breakout.5
So the market carries two clocks. The front-month, near $2.94 on Friday (2026-07-10), reflects comfortable balances, record output and a benchmark still doing its old job of clearing cheap Gulf Coast gas. WoodMac's warning is a bet on the second clock: that the low-cost inventory is running down and the curve underprices the cost of the next tranche of supply.7
Watch injection-season storage builds against the five-year average and weekly feedgas departures through the summer. If builds stay heavy while exports hold near 141 Bcf a week, the front stays capped and WoodMac's structural call remains a 2030s story. A run of light builds would be the first sign the elasticity WoodMac describes is already fading.5,1