East Daley Analytics expects a looser natural gas market balance to prevail in the coming 2026-27 heating season, creating some downside risk for prices next year.
In the latest Macro Supply & Demand report, we forecast gas supply to outpace demand by a margin of about 1.9 Bcf/d vs last winter. Production is 3.4 Bcf/d higher in our outlook, led by gains in the Permian, Haynesville and Northeast, while new LNG export capacity and increased gas-fired power generation anchor a 1.2 Bcf/d increase in demand (see figure below).
The key unknown is the severity of winter weather, and here the early signs lean bearish. Meteorologists expect a strong El Nino weather pattern, which means the Midwest and Northeast, the leading gas consuming regions, are likely to experience a mild winter. As a result, we forecast residential and commercial demand will decline 0.8 Bcf/d vs the 2025-26 heating season.
So, what’s the impact on storage? East Daley projects a withdrawal totaling just over 2.0 Tcf for the heating season, lower than last winter due to excess supply. At the end of March, we predict the storage surplus to the five-year average will remain close to 100 Bcf, roughly the same as today. We see some oscillation in this number, however, as February’s surplus could drop into the single digits. This will cause a modest spike in prices above $4.25/MMBtu – a move the forward market has not priced in yet.
See East Daley’s Macro Supply & Demand report for more detail on the winter outlook. Our winter strip forecast (Nov ’26-March ’27) remains largely unchanged from last month at $3.73/MMBtu, or $0.50 higher than the forward curve. – Jack Weixel.
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