US natural gas is expected to be cheaper this winter than last, with a strong El Nino weather pattern curbing demand and ample production keeping supplies well balanced, analysts said.
Lower gas prices during peak heating months of December to February could ease heating costs and help contain electricity prices, offering some relief to consumers as broader inflationary pressures persist. About 40% of US power generation comes from gas-fired plants.
Gas futures contracts on the New York Mercantile Exchange for December 2026 through February 2027 averaged $3.49 per million British thermal units (mmBtu) so far, down from $3.96 for same period during the winter of 2025-2026.
Gas futures were currently trading around $3.04 per million British thermal units (mmBtu).
US gas production was on track to reach record levels for a second year in a row, up about by 4% from the current annual all-time high of 107.6 billion cubic feet per day (bcfd) in 2025, helping keep inventories well supplied heading into the winter heating season.
Meanwhile, a strong El Nino weather pattern – a warming of the surface water in the central and eastern Pacific Ocean – could bring warmer-than-normal temperatures to key northern heating markets and curb residential and commercial demand.
“Domestic demand could be weaker than normal if the expected strong El Nino conditions result in a relatively mild winter. In addition, the warmer-than-normal weather currently expected for October and November could extend the storage injection season by another week or two, leaving inventories in a relatively comfortable position entering winter,” said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City.
Zhu expects prices at the US Henry Hub gas benchmark in Louisiana to average around $3.50 per mmBtu from December through February, about 12% below last winter’s average.
Analysts at Bank of America said in a note this week that gas prices could be further depressed by a mild winter resulting from a strong El Nino, delays to US LNG export projects or higher-than-expected gas production in the Permian Shale in West Texas and eastern New Mexico.
AMPLE SUPPLY SETS STAGE FOR WINTER
Henry Hub spot prices averaged $2.93 per mmBtu from June through August, 6% below the same period last year, as increased renewable generation, record gas production and ample inventories helped limit prices, the US Energy Information Administration said last week.
The amount of gas in storage has remained above normal levels since March. There was currently about 3% more gas in inventory than usual for this time of year.
“If demand averages below normal because of the warmer weather related to the El Nino, then downside to prices wouldn’t be a surprise,” said Robert DiDona, president of Energy Ventures Analysis.
Still, growing domestic and export demand is expected to absorb some of the additional supply and weaker heating demand, limiting the downside for prices.
U.S. LNG exports are expected to average 1.5-2.0 bcfd above last winter. Rising electricity consumption, including from data centers, could boost power-sector gas demand by another 0.5-1.0 bcfd, according to John Paisie, president of consulting and research firm Stratas Advisors.
“Higher LNG exports and power-sector demand should offset much of the decline in heating demand stemming from El Nino. However, they are unlikely to fully offset the impact of a materially warmer winter,” Paisie said.
(Reporting by Noel John in Bengaluru; Additional reporting by Scott DiSavino in New York; Editing by Liz Hampton and David Gregorio)