Henry Hub natural gas front-month futures spiked 9.1% to $3.30 per MMBtu on September 24, marking a 4.6 standard-deviation move that caught much of the market off guard. 

The rally, triggered by a leak on the TCO pipeline that stranded approximately 1.8 Bcf/d of supply, has refocused attention on the fragility of US gas infrastructure heading into the winter heating season. 

Actium Soluciones analyses the forces shaping natural gas prices in the fourth quarter.

Despite record summer heat across the United States, Henry Hub prices through much of the third quarter had been running approximately 6% lower year-over-year. 

Abundant supply from the Permian Basin and above-average storage levels had kept the market well-supplied. 

The pipeline disruption, however, exposed how rapidly sentiment can shift when a major transmission artery goes offline, turning a complacent market into a volatile one in a matter of hours.

Supply Dynamics and the Permian Surge

US marketed natural gas production reached 123.6 Bcf/d in June 2026, up 4.6% year-over-year, according to EIA data. Most of that growth originates from the Permian Basin, where associated gas production continues to rise alongside crude oil output. 

Higher crude oil prices throughout 2026 compared with last year have supported sustained drilling activity in the region, pushing associated gas volumes to record levels.

The EIA projects working natural gas inventories will reach 3,966 Bcf by the end of October, approximately 5% above the five-year average. 

That cushion has historically limited upward price pressure during the injection season, but the calculus shifts dramatically once withdrawals begin in November. Any weather-driven surge in heating demand could erode the surplus within weeks.

Gas rig counts have edged up by four over the past month to 101 rigs, yet overall drilling activity remains insufficient to meet growing LNG export demand. 

The Haynesville shale, the primary dry gas basin, has posted the largest production declines, with October output averaging roughly 1 Bcf/d below September levels according to pipeline flow data. 

Producers have been reluctant to ramp drilling until prices sustain above $3.50, the threshold many operators cite as necessary for attractive economics in the basin.

LNG Export Demand Reaches Record Levels

LNG feedgas flows hit a record in October, with volumes averaging 16.5 Bcf/d, up from September. The commissioning of new export capacity along the Gulf Coast has structurally increased domestic gas demand, tightening the supply balance even as production grows. 

The Plaquemines LNG terminal in Louisiana has been ramping steadily, adding incremental export capacity that was not yet online at this time last year.

Morgan Stanley expects natural gas prices to reach $5 per MMBtu in 2026, citing the combination of rising LNG demand and subdued supply-side activity. 

The bank forecasts a storage deficit re-emerging during winter and growing over the course of the year, ultimately pushing prices well above current levels.

The EIA’s July Short-Term Energy Outlook projected an average Henry Hub price of $3.67 per MMBtu for 2026 as a whole, revised upward from $3.60 in the June estimate. 

For the fourth quarter specifically, prices are expected to rise as heating demand draws down inventories. 

The agency noted that consumption during the winter months could exceed 100 Bcf/d if temperatures trend below normal, a scenario that would rapidly tighten the storage balance.

Technical Picture: Breakout Confirmed?

On the daily chart, the September 24 surge broke natural gas decisively above the $3.00 psychological barrier and the 50-day SMA near $2.95. The move carried prices to their highest level since the spring shoulder season and established a new support zone between $3.05 and $3.15.

The RSI (14) spiked to 70 following the pipeline-driven rally, entering overbought territory. While overbought readings in commodity markets can persist during trend acceleration, a short-term pullback toward $3.10 would be constructive, establishing a higher support base for the next leg higher. 

The indicator has since cooled to approximately 54, suggesting the overbought condition is resolving through time rather than price.

What to Watch This Winter

Kalshi prediction markets assign a 64% probability to natural gas closing above $3.299 on October 16 and a 44% probability of exceeding $3.399. The skew suggests the market leans bullish but remains uncertain about the pace of the rally.

The intersection of record LNG demand, constrained supply growth, and seasonal heating needs creates a structurally bullish setup for natural gas into year-end. 

The key risk is that above-average storage levels absorb enough demand to delay the anticipated deficit, keeping prices range-bound through the autumn shoulder period. 

Traders should monitor weekly EIA storage reports and NOAA long-range temperature forecasts for confirmation of the winter demand thesis.