U.S. natural gas markets enter the 2025–26 winter season from a position of relative strength, with record production, healthy inventories, and modestly tightening balances. Benchmark NYMEX futures have averaged $3.42 this year—roughly 50% above 2024 levels—despite a mostly looser fundamental backdrop. The rebound reflects bullish sentiment coming out of last winter with a steep storage deficit and the influence of strong LNG export growth. However, this summer saw declines in power generation demand caused by higher prices, mild summer weather, and rising renewable output. As a result, storage levels recovered to near year-ago marks by autumn, easing some of the concerns that had surfaced earlier in the year about potential pre-winter shortfalls and allowing forward pricing to relax from summer highs.
Looking ahead, fundamentals suggest a slightly tighter market through the winter. LNG feedgas demand continues to climb, driven by rapid ramp-ups at Plaquemines and Corpus Christi Phase 3, while Golden Pass is expected to begin contributing later this season. Production remains at record highs near 108 Bcf per day but has plateaued since midsummer with prices down from annual highs, underscoring growing market sensitivity among producers. A cooler outlook across the Upper Midwest and East—consistent with the developing atmospheric setup—should lift residential and commercial demand to around 38.5 Bcf per day, modestly above last year. Taken together, Pinebrook projects a total seasonal drawdown of roughly 2.1 Tcf, leaving end-of-March inventories between 1.7 and 1.9 Tcf, broadly aligned with last winter.
Despite the fundamental firmness, Pinebrook’s view is that the forward curve may be slightly overvalued. With balance-of-winter contracts trading near $4.25 per MMBtu, current prices appear to embed an outsized risk premium for cold weather and potential supply disruptions. Our base case calls for average settlements between $3.75 and $4.00, assuming normal conditions prevail. Upside risk remains if extended Arctic outbreaks materialize, especially in constrained regions such as the Upper Midwest, Mid-Atlantic and Northeast where pipeline capacity is limited. Spot market volatility in those areas—rather than sustained NYMEX strength—represents the most acute risk for end users this winter.
