Bank of America has increased its forecast for U.S. natural gas prices in the second half of 2026, citing tightening supply conditions and rising demand that could draw down inventories ahead of winter.
Montreal (Oil Monster): Bank of America has increased its forecast for U.S. natural gas prices in the second half of 2026. According to the bank, tightening supply conditions and growing demand could result in lower inventory levels ahead of the upcoming winter heating season.
The bank now expects the Henry Hub benchmark to average $3.80 per million British thermal units (MMBtu) during the second half of the year, up from its previous estimate of $3.60/MMBtu. However, it kept its 2027 price outlook unchanged at $4.00/MMBtu.
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Although U.S. natural gas production continues to rise, much of the additional supply has been absorbed by stronger consumption from liquefied natural gas (LNG) export facilities and the power generation sector. Lower pipeline imports from Canada have also contributed to a tighter market.
The revised forecast is mainly driven by rising LNG demand. The bank noted that feedgas deliveries to U.S. export terminals during the second quarter of 2026 were significantly higher than a year earlier. Bank of America expects demand to increase further as new LNG facilities begin operations over the next 18 months.
Meanwhile, natural gas-fired power plants have gained market share from coal following the decline in gas prices earlier this year. Domestic production continues to remain below the peak recorded in late 2025. The bank expects firmer natural gas prices in the coming months.
Bank of America expects Henry Hub to average $3.80/MMBtu in the second half of 2026, up from its prior $3.60/MMBtu estimate.
The bank kept its 2027 forecast unchanged at $4.00/MMBtu.
Stronger LNG export demand, higher power-sector consumption, and lower Canadian pipeline imports are absorbing additional U.S. supply.
Feedgas deliveries to U.S. export terminals were significantly higher in Q2 2026 than a year earlier, with more demand expected as new facilities come online.
Production is rising but remains below the peak recorded in late 2025, while gas-fired power plants are gaining share from coal.
