US natural gas remains under pressure in the short term: Henry Hub is trading around 2.5–2.8 USD/MMBtu amid mild weather, high inventories, and weak seasonal demand. Over the past month, the front-month contract has declined notably from its March highs, and the market has effectively split into two phases: currently — oversupply and weak spot pricing; in the medium term — gradual balance tightening.
LNG and AI are reshaping the fundamentals
The key structural driver is the rapid growth of US LNG exports. In 2026, LNG exports are expected to reach 16.7 Bcf/d, and exceed 18 Bcf/d by 2027 with the launch of Plaquemines LNG, Corpus Christi Stage 3, and Golden Pass LNG. At the same time, the market is increasingly pricing in a new long-term demand source — energy consumption from AI data centers. Hyperscale projects are already being viewed as a separate demand driver for gas-fired generation, and the combination of LNG + AI could establish a new price range significantly above 2024–2025 levels.
Geopolitics and the global LNG balance
Recent news regarding Iran has temporarily eased tensions in energy markets: oil pulled back following reports of potential de-escalation between the US and Iran. However, for natural gas, the key risk remains tied to any disruptions around the Strait of Hormuz and LNG shipping routes. US gas can no longer be treated as a purely domestic market: its pricing is increasingly influenced by the global LNG balance, demand in Europe and Asia, and the geopolitical risk premium.
What will drive the market next
In the coming weeks, the main focus will be summer weather and the pace of LNG feedgas demand growth. So far, a mild spring has kept the market range-bound, but if the summer turns hot and LNG exports continue to accelerate, the balance could tighten significantly in the second half of the year. Bullish sentiment is also supported by the forward curve: deferred contracts for 2026–2027 are trading well above the spot market, reflecting expectations of stronger demand and a gradual move away from the era of cheap gas.
Previously, in particular in the article Natural gas back under pressure after rebound, I noted that in short-term a breakout from the current range is unlikely.
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