Bank of America lifted its second-half 2026 Henry Hub forecast to $3.8 per million British thermal units on tightening supply. The bank pointed to stronger LNG and power-sector demand and reduced Canadian imports offsetting production gains, with the risk that inventories enter winter below 3.8 trillion cubic feet.
Bank of America raised its second-half 2026 Henry Hub natural gas forecast to $3.8 per million British thermal units from $3.6, pointing to tight supply balances. The bank flagged the risk that gas inventories enter winter below 3.8 trillion cubic feet.
Prices for natural gas averaged higher year-over-year from January 2025 to January 2026. Then mild temperatures from late February through April weighed on domestic prices. Since February, prices have averaged lower year-over-year even as balances tightened to levels last seen in 2024.
Demand outruns rising production
Production keeps growing, yet the bank said stronger demand from liquefied natural gas plants and the power sector, together with reduced Canadian imports, has offset those supply gains. Prices have recovered since their April lows.
Gas-fired power plants have taken a higher-than-normal share from coal since Henry Hub hit those April lows. Renewables kept expanding alongside them, with solar setting records and wind posting its best June performance.
LNG pull widens on both sides of the border
LNG feedgas demand in Q2 2026 averaged about 3.1 billion cubic feet per day higher year-over-year. Bank of America expects U.S. LNG feedgas demand to rise by nearly 4 billion cubic feet per day over the next 18 months as more facilities start up.
In Canada, demand from LNG Canada trains 1 and 2 has outpaced Western Canada production growth since last summer, leading Canada to reduce pipeline gas exports to the U.S. On Mexico's west coast, Costa Azul LNG recently began taking feedgas.
Supply stays below the winter peak
Production remains below December 2025 highs despite increased activity in Haynesville and Appalachia. In the Permian, current strong Waha prices suggest less stranded gas than expected. Bank of America held its 2027 Henry Hub forecast at $4 per million British thermal units.
Source: Investing.com
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