Natural Gas Prices Hover Near $3 as LNG Feedgas Tops 20 Bcf/d

A record that barely moved Henry Hub

U.S. natural gas just set a record that, in most years, would have pushed prices higher. Gas deliveries to American LNG export plants passed 20 billion cubic feet per day for the first time, almost ten years after the first Lower 48 cargo left Sabine Pass in 2016.1 NGI measured feedgas at 20.7 Bcf/d on October 19, the third day in a row above the previous high.36 Henry Hub futures went the other way. The November contract settled at $2.963 on October 20, its first close under $3 in more than two weeks. By midday October 21 it had dropped to $2.829.47 By the October 23 close it had recovered to about $3.09, which leaves gas down roughly 6% over the month and about 16% for the year.42

My reading of the coverage is that U.S. gas is now set by two forces pulling in opposite directions. LNG exports run near full capacity all the time, so they hold up the bottom of the market. Record domestic output keeps a lid on the top. That leaves short-term moves to the weather. The same week, U.S. oil and gasoline were tied to a war in the Middle East, and they could hardly have behaved more differently.

How the LNG build-out got here

RBN Energy reports eight operating terminals and seven more under construction. It credits the latest jump to three things: Plaquemines LNG, Cheniere's Corpus Christi Stage III, and the slow ramp-up of the ExxonMobil–QatarEnergy Golden Pass project.1 Golden Pass Train 1 took in as much as 690 MMcf/d in October. That is a record for the plant, though still short of the 800–850 MMcf/d the train needs at full operation.1 The developers now expect the second and third trains to start in 2027.10 For the week ending October 19, feedgas averaged 19.6 Bcf/d, about 1.5 Bcf/d more than the week before, as Sabine Pass and Plaquemines took in more gas.4

The reports differ on some details, which shows how hard this sector is to count. RBN lists eight operating terminals. Other outlets say Golden Pass became the ninth when it shipped its first cargo on April 22.17 One account says the plant started producing on March 30.5 RBN also notes that different trackers reached the 20 Bcf/d mark on different days, because some intrastate pipeline flows have to be estimated.1 Industrial Info Resources put feedgas at 19.6 Bcf/d mid-week and called reports of 20 Bcf/d unconfirmed.9 The exact figure matters less than the direction: every source has feedgas at or near a record, and none sees it falling this winter.

Why a $26 spread doesn't reach Louisiana

The most telling number is the gap between U.S. and overseas prices. Since the Iran war started on February 28, Europe's TTF benchmark has gained about 178% and Asian spot LNG about 190%, while Henry Hub futures are up only about 9%.7 With TTF near $29 and Henry Hub around $2.83, the spread was roughly $26 per MMBtu. That is far more than the $3 to $5 it costs to liquefy, ship and regasify a cargo.47 In a market with spare export capacity, that gap would draw U.S. gas abroad and push Henry Hub up. Today it just stays wide, because the plants are already running about as hard as they can. Fitch Ratings left its Henry Hub assumptions unchanged for that reason.746

The war is also why demand for U.S. cargoes is so firm. Qatar's chief executive has said the country is producing "very little LNG," with equipment for the North Field expansion stuck behind the blockade of the Strait of Hormuz.5 The Oxford Institute for Energy Studies now uses a return to normal by April 2027 as its base case. That scenario was previously its worst case.9 RBN expects Europe's low storage and reduced Qatari output to set up another record-breaking winter for U.S. feedgas.1

On the supply side, Lower 48 output hit records of 113.3 Bcf/d in August and September, based on LSEG data, before Hurricane Isaias and pipeline outages cut into October volumes.7 The EIA's October outlook expects dry gas production to reach a record 116.1 Bcf/d in 2027, which it says will outpace new LNG demand.46 Some published production figures run noticeably higher than these, depending on how the series is defined.5 Inflation-adjusted summer spot prices averaged $2.93, about 6% below last summer, which the American Gas Association attributes to record output and plentiful storage.45

Forecasts sit above today's price

Official forecasts are higher than where the market trades. The EIA expects Henry Hub to average $3.48 in 2026 and $3.16 in 2027. Its full-year 2026 figure is pulled up by January, when Winter Storm Fern pushed the monthly average to $7.72.49 The futures curve agrees closely: the November–March strip settled at an average of $3.26 on October 16, with January 2027 the winter high near $3.76.46 Bank of America stands out with a $4.00 call for 2027, based on new export trains. Most other forecasters fall between $3.15 and $3.50.46 The narrow December–November premium, a record low of about 28 cents on October 7, suggests traders see little risk of a winter price spike.46 I agree with that view for this winter. The bullish argument depends on capacity that doesn't arrive until 2027.

Data centers: the next large source of demand

If LNG drives demand growth today, data centers look like the next driver. BloombergNEF now expects U.S. gas burned to power data centers to rise by 15 Bcf/d over the ten years to 2035. That is more than double its December estimate, and more gas than any country uses except China, Russia, Iran and the U.S.30 Wood Mackenzie projects power-sector gas demand rising by 17 Bcf/d by the mid-2030s and has said "the decade of cheap Henry Hub gas is coming to an end."30 Other estimates vary widely. East Daley Analytics has used 4.2–6.1 Bcf/d. EQT, which has a financial stake in the outcome, sees about 10 Bcf/d of new gas-fired power demand by 2030 in its base case.25

The near-term EIA numbers are more modest. The agency expects natural gas to supply 40% of U.S. power generation through 2027, and power-sector gas use to reach a record 38.1 Bcf/d in 2027.21 Projects already underway show where things are heading. Chevron and Microsoft have a 20-year agreement for off-grid gas supply to a 2.67-gigawatt plant and AI campus near Pecos, Texas.27 Meta's Hyperion project in Louisiana includes a 2 GW combined-cycle gas plant.29 Pipelines and equipment are the real constraints. North American vacancy in primary data center markets is 1.4%, and the IEA reported gas turbine orders up 70% in 2025.28

The effect on prices hasn't shown up yet. The EIA expected summer wholesale power to average about $45 per MWh, $4 less than last year, largely because gas is cheap.21 Household bills are a different matter. One estimate based on EIA forecasts puts average annual electricity spending at about $1,931, up from about $1,710 in 2024.25 My conclusion is that data centers, not exports, are the more likely cause of the next lasting move in U.S. gas prices. That probably happens after 2027, once new LNG trains and AI power demand both grow faster than production.

Oil and gasoline tell the opposite story

Crude oil is where the war's costs show up for U.S. consumers. Brent settled at $113.17 on October 22, its highest close since May 4. WTI gained 2.4% to $99.47.3438 By Friday WTI was above $100, on pace for a gain of more than 10% over three weeks, after Houthi attacks on Saudi oilfields and incidents in the Strait of Hormuz.39 WTI's October 23 close of $101.22 puts it up about 76% for the year.33 Goldman Sachs estimates global crude freight has risen above $20 a barrel from $3 a year ago.35

Price reports for the week vary because of contract rolls and timing differences. EIA spot data showed a Brent–WTI spread above $30 earlier in October, which narrowed sharply after the November WTI contract expired.3136 Every source agrees prices stayed high. Brent futures for January 2027 traded near $102.59.37

Gasoline prices have eased a little but remain historically high. AAA's national average fell 6 cents in a week to $4.27 on October 22, helped by the switch to cheaper winter-blend fuel.11 This is the first October with the average above $4.12 It is also the 158th day above $4 this year, a calendar-year record according to GasBuddy's Patrick De Haan.17 Before the war the average was under $3.17 Diesel averaged about $6.31 after setting a record of $6.53 on September 22. The Strategic Petroleum Reserve is at 282.7 million barrels, its lowest level since 1982.19

Production helps, but not quickly

U.S. output is at record levels and still rising. Weekly crude production reached an all-time high of 13.98 million b/d in the week ended October 2.58 The EIA raised its 2026 forecast to 13.87 million b/d and its 2027 forecast to 14.30 million b/d.55 The agency also expects Middle East shut-ins to drop from 4.5 million b/d in the fourth quarter to 2.7 million b/d in early 2027.52 Its 2027 WTI forecast of $79.74 would be a large decline from current levels. Even so, a record of about 14 million b/d has not stopped WTI from passing $100. As one market analysis put it, more domestic output will take time to change global balances.40

The overall picture is that U.S. production records are softening the shock for gas buyers and doing much less for drivers. Gas prices are set mostly by U.S. supply and capacity limits. Oil prices are set by what happens in the Strait of Hormuz.