Natural Gas Price Forecast 2026: Is a Major Bull Run Ahead?

U.S. natural gas (NG) prices surged above $5.00 in late 2025 following a sharp increase in LNG exports and a deep December cold snap. In my view, this tight seasonal rally, combined with strong structural drivers, sets the stage for sustained price strength into early 2026. Milder weather and rising production may ease pressure in the second half of the year. This article presents an examination of macro trends, market signals, and technical patterns to identify the next move in natural gas for 2026.

Market Developments in 2025

U.S. Natural Gas Prices Surge on LNG Demand and Cold Weather

U.S. natural gas prices increased sharply in 2025 as LNG exports increased and extreme weather drove up domestic consumption. The strong demand from Europe pushed U.S. futures above $5/MMBtu for the first time in three years.

Europe relied heavily on U.S. LNG as storage levels dropped and renewable output remained weak. A cold snap across the United States added pressure by increasing heating demand. These combined forces kept U.S. prices elevated throughout the latter half of 2025.

European Prices Decline Despite Supply Risks

On the other hand, European benchmark prices moved in the opposite direction. The chart below shows that gas prices have continued to drop from June onward and reached their lowest level since spring 2024, despite the strength in US natural gas prices.

Europe experienced mild weather and higher-than-normal storage early in the year. Moreover, renewable power generation improved later in the summer, thereby reducing the need for electricity generated by gas-fired power plants. Despite the geopolitical risks, Europe’s ample LNG access and stagnant industrial demand kept prices suppressed.

Global Demand Weakens as Asia Slows

Global natural gas consumption grew only 0.5% in 2025. High prices and weak macroeconomic conditions limited demand growth. In Asia, gas use remained flat as lower industrial output and strong renewable electricity supply curbed consumption.

China’s LNG imports plunged as domestic production increased and economic momentum slowed. On the other hand, Europe received notable demand growth due to colder weather and storage obligations. Despite these regional differences, global demand overall remained soft.

Strong North American Production Supports Supply Growth

North America led global supply expansion in 2025. U.S. gas production grew about 3% due to high prices and strong export demand. More than half of U.S. LNG exports went to the European Union, where storage buffers weakened after repeated cold spells.

However, Russia’s production dropped sharply. Sanctions and reduced pipeline flows to Europe limited its export earnings. These diverging supply trends reshaped global trade patterns and supported a tighter market balance.

The chart below shows the year-over-year change in U.S. industrial production for natural gas and natural gas liquids since the 1970s. Volatility increased after 2010, with sharper rises and declines, most notably during the COVID-19 period in 2020, when production fell sharply before rebounding.

More recent data through 2025 shows a return to positive year-over-year growth, indicating rising natural gas production. This increase in supply may place downward pressure on natural gas prices in the medium term if demand remains weak or seasonal factors fade. However, if weather-driven demand strengthens and outpaces production growth, prices could remain elevated into the first half of 2026.

Russia–Ukraine Conflict Disrupts Global Gas Routes

The Russia–Ukraine war created ongoing disruptions in global natural gas supply. Ukraine targeted more than two dozen Russian refineries with drones, damaging output and raising uncertainty. Drone strikes also halted operations at terminals along the Black Sea and Baltic Sea. New U.S. and EU sanctions on Russian tankers, ports, and LNG technology restricted Russia’s ability to maintain export capacity. Although Russia redirected some flows to China through the Power of Siberia pipeline, volumes remained far below pre-war levels. This persistent instability pushed long-term price risks to higher levels.

Technical Analysis: Natural Gas Shows Strong Bottoming Structure

Natural gas appears to be entering the early stages of a new bullish cycle. The monthly chart below highlights a strong support zone between $1.60 and $2.40, where every major bottom since 2000 has formed. Rebounds from this zone occurred in 2002, 2009, 2016, and 2020, each triggering significant rallies toward the $6 to $10 range.

The most recent low at $2.04 in early 2024 aligns with this historical pattern. The sharp rebound to $5.49 by December 2025 may mark the beginning of a broader upward trend in 2026.

The weekly chart below shows a rounding base forming since the bottom of 2024. This pattern indicates prolonged accumulation and compressed volatility. Natural gas has traded within this base above $2 and reached a high of $5.49 in 2025. The structure mirrors previous consolidation phases that led to major breakouts. If this pattern holds, the current setup favours a continuation above key resistance levels.

From a technical perspective, the $5.50 level stands as the next key pivot. A sustained break above $5.50 would confirm a long-term bottom and open the path for a broader rally toward the $10.00 region in 2026. On the downside, the $2.50 area remains a strong support zone.

The RSI on both the monthly and weekly charts continues to trend higher without reaching overbought levels, indicating room for further upside. Overall, the long-term chart structure points to positive gains, with elevated volatility supporting a bullish bias heading into 2026.

Related Markets and Macro Drivers

Correlation with Crude Oil and the U.S. Dollar

Natural gas prices tend to move independently of crude oil, but short-term correlations between the two increase during major supply shocks or geopolitical events. In 2025, both commodities reacted to similar catalysts, including Middle East tensions, Russian export risks, and OPEC+ production signals. However, natural gas remained more tied to regional demand.

Crude oil prices remained relatively weak throughout 2025, despite geopolitical volatility. Brent crude struggled to break out of its multi-month range and failed to sustain rallies, reflecting concerns about global demand, high inventories, and muted economic growth in China. This divergence reduced the strength of correlation with natural gas, which rebounded more sharply due to weather-driven consumption and U.S. export activity.

On the other hand, the U.S. dollar index plays a more consistent role. A stronger dollar usually weighs on commodity prices by raising import costs for foreign buyers. In late 2025, the US dollar declined as markets factored in potential Federal Reserve rate cuts for 2026. This provided mild support for natural gas prices by easing global liquidity pressures.

The chart below compares Brent crude, natural gas, and the U.S. dollar index from 2016 to 2025. Natural gas prices show extreme volatility, with sharp spikes in 2022 during the post-Ukraine war energy crisis. Prices surged again in late 2025 amid winter demand and rising LNG exports. Brent crude trends more steadily but remains soft in 2025, failing to mirror the strength in gas. This confirms a temporary decoupling between the two energy benchmarks.

Impact of Inflation Trends and Fed Monetary Policy

U.S. inflation eased steadily in 2025. The chart below shows that the US core inflation has slightly dropped in Q4 2025. This gave the Federal Reserve room to shift toward a more dovish stance. Markets now expect at least two rate cuts in 2026.

Lower rates reduce borrowing costs and support industrial energy consumption, particularly for gas-intensive sectors such as the chemicals and power generation industries. However, inflation shocks triggered by supply chain disruptions or wage spikes could reverse this trend.

Influence of Coal and Renewables on Gas Demand

Gas demand is increasingly influenced by competition from coal and renewable energy sources. In 2025, high gas prices forced many U.S. utilities to shift back to coal. U.S. Energy Information Administration (EIA) reported a modest uptick in coal-fired generation in late 2025, marking the first increase in three years. This trend could persist if gas prices remain high in 2026.

In Europe, weak wind and hydroelectric output led to increased gas-fired power generation throughout the winter. However, renewable capacity is expected to expand further in 2026. More solar and battery installations may reduce peak-hour gas needs. However, gas will remain the key baseload and backup fuel during weather-driven shortfalls in renewable energy.

What to Expect in 2026

Natural gas prices are expected to remain firm in early 2026. The EIA forecasts the Henry Hub natural gas spot price will average $4.30/MMBtu this winter. Colder-than-expected weather in December is driving higher heating demand.

However, prices are likely to ease after March. The milder temperatures and rising U.S. production will help cool down prices. For the full year, the average price is projected to be near $4.00/MMBtu. This marks a stable outlook compared to the volatility of 2025.

Moreover, electricity generation is expected to increase by 1.7% in 2026. This growth primarily stems from large-scale data centres in Texas and the PJM region. This adds steady support to gas-fired demand. Moreover, coal use is expected to decline next year as renewable energy sources expand. Power generators are expected to shift away from coal after a temporary rebound in 2025. This could strengthen gas’s role as the preferred baseload fuel.

Bottom Line

Natural gas enters 2026 with strong momentum. The strong winter conditions, LNG exports, and geopolitical disruptions supported prices into late 2025. Moreover, the technical structures indicate a completed bottom and favour further upside if prices clear the key resistance level of $5.50. At the same time, higher production and seasonal easing could cap gains later in the year.

Overall, the balance of macro drivers, related markets, and chart signals suggests strong prices early in 2026, followed by higher volatility as supply growth and weather conditions normalise. A sustained break above $5.50 would open the door for a surge toward the $10 level. However, if prices fail to break above $5.50, the market is likely to remain in a strong consolidation range between $2 and $5.