(Investing.com) – Natural gas prices could surge to $5 per million British thermal units in 2026 as demand rises and supply remains constrained, Morgan Stanley said in a new report assessing winter market scenarios.
The bank forecast that U.S. gas storage levels will exit October at around 3.97 trillion cubic feet, roughly 5% above normal, but expects inventories to tighten sharply in the coming quarters.
“With LNG demand growth progressing well and supply-side activity still subdued, we continue to forecast a tightening market in the quarters ahead,” the analysts wrote.
Under normal weather conditions, Morgan Stanley expects “a storage deficit re-emerging this winter and growing over the course of next year, ultimately pushing prices >$5/mmbtu in 2026.”
The firm added that “heating needs and winter weather will be a key swing factor in the months ahead.”
Production trends are said to suggest lower supply. Morgan Stanley explained that October output has averaged about 1 billion cubic feet per day lower than September, with the Haynesville shale posting the largest declines, according to pipeline flow data cited by the bank.
Although gas rig counts have edged up by four over the past month, overall activity remains far short of what is needed to meet growing LNG export demand, according to the bank.
LNG exports, meanwhile, hit a record in October, with feedgas flows averaging 16.5 bcf/d, up from September, Morgan Stanley stated. The Plaquemines terminal has received approval to bring its final two trains online, while the Golden Pass project remains on track for first LNG later this year.
