The U.S. Energy Information Administration (EIA) projects that natural gas prices in the U.S. will rise in 2025 and 2026, driven by increasing demand outpacing supply growth. This trend is largely due to a significant rise in demand from U.S. liquefied natural gas (LNG) export facilities, which will contribute to lower natural gas storage levels compared to the past two years.

In its January Short-Term Energy Outlook (STEO), the EIA forecast that the U.S. benchmark Henry Hub natural gas spot price will average $3.10 per million British thermal units (MMBtu) in 2025 and $4.00/MMBtu in 2026. This marks a notable increase from the record-low prices seen in 2024.

EIA expects that in 2025, demand for natural gas—including both domestic consumption and LNG exports—will grow faster than supply. Total U.S. natural gas consumption and exports are expected to rise by 3.2 billion cubic feet per day (Bcf/d), or nearly 3%, while production and imports will only increase by 1.4 Bcf/d. This imbalance will push Henry Hub prices up by 43%. The demand-supply gap will continue into 2026, causing a further 27% rise in natural gas prices.

Due to this surge in demand, U.S. natural gas storage inventories are forecast to drop from 6% above the five-year average in December 2024 to below the rolling five-year average by the third quarter of 2025. Inventories are expected to remain below the five-year average through the end of the EIA’s forecast period. This contrasts with the higher-than-average gas storage levels seen in 2023 and 2024.

A significant factor driving demand is the growing LNG export market. EIA forecasts total U.S. natural gas demand will increase by 3.2 Bcf/d in 2025 and by another 2.6 Bcf/d in 2026, with LNG exports contributing heavily to this rise. In 2025, LNG exports are expected to grow by 2.1 Bcf/d, with another 2.1 Bcf/d increase in 2026. This growth is driven by the startup of three new LNG export facilities: Plaquemines LNG, Corpus Christi Stage 3, and Golden Pass LNG. Plaquemines LNG and Corpus Christi Stage 3 will continue ramping up operations, while Golden Pass LNG is expected to begin operations in mid-2026.

On the supply side, U.S. dry natural gas production is forecast to increase by 1% in 2025, reaching 104.5 Bcf/d, and by nearly 3% in 2026, reaching 107.2 Bcf/d. The increase will be primarily driven by production growth in the Permian and Haynesville regions, with the Permian's growth linked to rising crude oil production, as much of the natural gas is produced as associated gas. The Haynesville region is expected to see increased production in 2026 due to higher natural gas prices and growing demand from LNG export projects on the Gulf Coast.

As U.S. natural gas inventories were above average in 2023 and 2024, prices were driven down, setting multiple record lows. However, with demand outpacing supply over the next two years, the EIA expects a reversal in trends, with prices rising and inventories dropping below historical averages from 2025 onward.