U.S. spot natural gas prices for Thursday at the Waha Hub in West Texas rose to their highest since early February – while remaining in negative territory – as demand for the fuel rises with the coming of summer and pipeline companies start to wrap up spring maintenance.
Next-day prices at Waha have remained below zero for a record 78 days in a row as pipeline constraints from spring maintenance trapped gas in the Permian Shale, the nation’s biggest oil-producing basin in West Texas and eastern New Mexico.
Those low prices prompted some energy firms to reduce gas output. Output in the Permian is on track to remain below the monthly average record of 29.1 billion cubic feet per day (bcfd) hit in December and February, until July, when output is expected to reach 29.2 bcfd, according to projections from the U.S. Energy Information Administration (EIA).
One billion cubic feet is enough gas to supply 5 million U.S. homes for a day.
Analysts have long said negative prices, which force some energy firms to pay others to take gas associated with their oil production, were a sure sign that the Permian region needs more gas pipes.
More pipes are on the way this year, but not soon enough to handle all the gas currently coming out of the ground. Later this year, analysts expect energy firms to boost Permian output as those new pipes enter service and as soaring oil prices from the Iran war encourage producers to pull more oil and the gas associated with that oil production out of the ground.
With new pipes entering service, EIA projects Permian output will rise every month from July to December, reaching a monthly high of 30.2 bcfd in December. That would be almost enough gas to supply around a third of all the fuel consumed in the U.S.
NEGATIVE PRICES
Energy firms in the Permian have been willing to take some losses on gas because they can make up for those with profits from selling oil. Negative gas prices were not very common a decade ago when environmental rules were less strict and many drillers could flare or burn off some of their unwanted gas.
But in recent years, that gas has become increasingly valuable as a fuel to generate electricity used by power-hungry U.S. data centers and for export via pipelines to Mexico and liquefied natural gas (LNG) to markets around the world.
Spot prices at the Waha Hub rose to a 16-week high of minus 46 cents per million British thermal units (mmBtu) for Thursday, up from minus $2 for Wednesday.
Daily Waha prices first averaged below zero in 2019. They did so 17 times in 2019, six times in 2020, once in 2023, 49 times in 2024, 39 times in 2025, and a record 87 times so far this year.
Waha prices have averaged a negative $2.38 per mmBtu so far in 2026, compared with $1.15 in 2025 and $2.88 over the past five years (2021-2025).
(Reporting by Scott DiSavino; Editing by Hugh Lawson)