Natural Gas 2026 Forecast: Natgas Braces for Pullbacks as Oversupply Persists

Natural Gas Technical Analysis

Looking at the natural gas market, it’s been pretty noisy, and really, at the beginning of the year, we were on fire. Now that was because there was a major amount of cold and snow and everything else in the northeastern United States, driving prices up as demand picked up. I remember one point in that time frame having about 1.5 meters worth of snow in my front yard. Now that being said, that is an anomaly for most of the year, and if anything, it happens maybe once a year.

We had a little bit of noise once the US attacked Iran and the Iranians attacked the Qatari supply. As Qatar is a major supplier to the European Union, you saw more of that in the Rotterdam contract than over here in Henry, Louisiana. So, with that being said, this market has shown itself to be very US-centric still.

Qatar has since brought back production to about 80%, and I can’t imagine they’re going to sit on their hands, so by the time we get to the high-demand season, I think we’re probably pretty much back to normal unless the war between the Americans and the Iranians escalates.

I don’t see that happening, at least not yet. It doesn’t look like anybody has a real appetite for that because we had reached the point where you’re starting to talk about hundreds of thousands of US troops in Iran, and that is a completely different conversation.

Short-Term Pullbacks and Winter Contract Outlook

So, with that being said, short-term pullbacks, I think, will be the norm here for probably the next 2 to 3 months, but once we start to focus on winter contracts in the fall, the futures market should pick up. As things stand right now, I believe sometime in maybe September you start to nibble on rallies and perhaps try to get to the $4.50 level. This is all weather-dependent, though, and that’s the biggest thing. Transmission is fine, the United States has more natural gas than we know what to do with, and in fact, it’s in the drinking water in some places; it’s that abundant.

So, really, at this point in time, natural gas is still a market I like to short. There was a narrative last year about AI data centers needing more electricity. Something that they forgot to include in that was it doesn’t matter how much natural gas you have; if you do not have the electrical grid to power it, you don’t have the ability to convert natural gas into electricity, so that’s a completely different conversation.

Ultimately, I think we’re heading to a normal second half. I don’t see anything that’s going to be that different. I’d be surprised if we get any further than $5. I’d be surprised if we don’t at least make a go at getting to the $4.50 level, but the next couple of months, I fade rallies that show signs of exhaustion. I’ve got no interest in buying natural gas.

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