A colder-than-expected start to winter and record levels of liquefied natural gas (LNG) flows have helped fuel a strong rally in natural gas prices since mid-October, according to analysts at Morgan Stanley, who see additional upside ahead.
As of 08:55 ET (13:55 GMT), natural gas prices dipped 0.5% to $4.968 per million British thermal units (MMBtu). Despite the slight pullback, prices are up more than 17% over the past month and have climbed over 36% year-to-date.
For several months, Morgan Stanley analysts have projected that Henry Hub prices would rise above $5/MMBtu by early 2026. Prices have already rallied roughly 60% since mid-October, with the front-month contract recently trading above $4.90.
Henry Hub, located in Erath, Louisiana, is the main distribution point for natural gas in the United States. It serves as the official pricing location for futures traded on the New York Mercantile Exchange and is considered the dominant benchmark for North American natural gas prices.
The recent price strength is driven by better-than-expected end-of-season storage levels, record LNG exports, and the coldest December forecast in nearly ten years. However, strong production has limited some of the bullish sentiment for next year, leaving the forward curve heavily backwardated — meaning the spot price is higher than future prices.
Morgan Stanley noted that while they had expected a seasonal rise in production, recent data has come in slightly above their forecasts. Even so, the increase has been offset by stronger LNG feedgas demand and colder weather projections.
The bank reiterated its outlook, stating:
“We see further upside in the quarters ahead and reiterate our $5 forecast for 2026.”
