EIA Raises 2026 U.S. Gas Output Forecast to Record 122.5 Bcf/d, Pulling Annual Price Average Below $3.50
The EIA's August outlook projects a fourth consecutive production record, with Permian and Haynesville growth keeping the full-year spot average at $3.44 per million British thermal units.
The U.S. Energy Information Administration raised its 2026 natural gas production forecast to 122.5 billion cubic feet per day on Wednesday (2026-08-12), surpassing last year's record of 118.5 Bcf/d and marking what would be the country's highest-ever marketed gas output. The agency's August Short-Term Energy Outlook projects the year-on-year increase will come largely from the Permian Basin and Haynesville shale, two regions that have delivered the bulk of supply growth since 2025.7
Production has already been running ahead of prior forecasts. In the first half of 2026, marketed output averaged 121.3 Bcf/d — 4.6 Bcf/d, or 4%, above the same period in 2025. That pace leaves the full-year target looking achievable even if the back half delivers only modest incremental growth.7
The Permian, primarily an oil basin, generates gas as a byproduct of crude drilling. The EIA projects Permian gas production will average 29.2 Bcf/d in 2026, up 6% on 2025 levels, with a further 10% gain pencilled in for next year as pipeline constraints ease. The Haynesville, a dedicated dry-gas play that responds more directly to gas prices, posted a 1.1 Bcf/d increase in the first half of 2026 compared with the same period a year earlier — a gain of 7% — and the EIA expects full-year growth of 9%, or 1.3 Bcf/d.7,2
That supply growth is bearing down on prices. The EIA forecasts the Henry Hub spot price will average $3.44 per million British thermal units for the year, down 2%, or 8 cents, from 2025. NYMEX Henry Hub front-month was trading at $2.78 per million British thermal units as of early Thursday (2026-08-13), well below the full-year forecast average, suggesting spot markets are currently running softer than the annual mean implies.7
Storage data reinforce the bearish supply picture. Working gas inventories are running 141 Bcf above year-ago levels, roughly 8% higher, according to EIA storage data. A weekly draw of 52 Bcf came in well below the five-year average withdrawal of 168 Bcf, pointing to either mild demand conditions or strong production filling the buffer faster than seasonal norms.1
Morgan Stanley has noted that Lower 48 production is already recovering from spring maintenance disruptions and expects supply growth of roughly 3 Bcf/d this year. That assessment broadly aligns with the EIA's trajectory, though the EIA's full-year figure of 4.6 Bcf/d above 2025 is somewhat more aggressive.4
The EIA's June STEO had already flagged that U.S. marketed gas production would grow 3.3% in 2026, adding about 3.9 Bcf/d. The August revision pushes the expected increment higher still, driven by associated gas from crude drilling — a dynamic that makes production partly insensitive to gas prices. When oil prices support Permian drilling economics, associated gas output rises regardless of what NYMEX Henry Hub front-month is doing. NYMEX WTI crude front-month was trading at $83.09 per barrel as of early Thursday (2026-08-13), keeping Permian drilling broadly intact.5,3
Haynesville is a different story. As a gas-directed basin, its rig count and output are more sensitive to Henry Hub economics. The region's producers have been adding volumes through 2026 even with prices below $3 per million British thermal units for extended periods, betting on export demand pulling through incremental supply. The U.S. supplied 93% of global LNG export growth in 2025, according to Forbes. Without sustained LNG pull-through demand, sub-$3 spot prices could eventually slow drilling.6,7
The bull case for gas rests on demand rather than supply. Growing power-sector consumption, AI-driven data centre load and LNG export commitments are expected to absorb incremental output. But those demand drivers are diffuse and uneven in timing. Supply growth, by contrast, is quantified and already in the ground. The EIA's own price forecast of $3.44 per million British thermal units for 2026 implies a market that can absorb the volume, but with storage already elevated, the buffer against any demand shortfall is narrowing.4
If injection-season storage builds continue to outpace five-year norms through August and September, the $3.44 full-year average starts to look optimistic for the months remaining. Haynesville producers, whose drilling programmes depend on prices firming from current levels, face that test most directly.1,7