Investing.com -- Bank of America has lowered its balance-year Henry Hub forecast by approximately $0.2 per million British thermal units to $3.4 per mmbtu, citing mild weather conditions that extended from winter into April.

The mild end to winter helped replenish gas stocks, and the continued mild weather into April has weighed on gas prices. The bank estimates end of summer gas inventories will rise above the 5-year average to around 3.83 trillion cubic feet. Despite the reduction, the forecast remains above the current forward curve due to recent tight balances.

In the western United States, Bank of America identified bullish demand risks. Snow water equivalent peaked weeks ahead of normal, and the snow drought left the West with low reservoirs. The bank estimates this will lead to reduced hydrogeneration this summer and increased reliance on gas-fired power plants.

Locations like Southern California could see strengthening demand as the western US competes for more Canadian gas imports, particularly if Costa Azul LNG starts this summer and adds more gas demand in California. This could occur while LNG Canada feedgas demand is increasing, potentially lifting AECO prices.

In the East and Midwest, Bank of America noted growing power sector demand. Rising electric loads from data centers could require less efficient gas-fired generation to balance supply and drive power prices higher in PJM and MISO. The bank said East and Midwest storage deficits could prove difficult to replenish given growing power demand.

Midwest locations like Chicago could face challenges this summer as stronger demand in the West from LNG and hydro could limit Canadian gas flows into the Midwest, while robust power demand in PJM could keep more gas in the East.

The Permian Basin has exhausted natural gas pipeline takeaway capacity, with Waha realizing record low prices. Gas to oil ratios continue to increase, and higher oil prices could drive more associated gas production. Bank of America believes Waha remains distressed throughout the summer as stranded gas likely fills the GCX expansion immediately.

Meaningful transport relief is not expected until late this year or early 2027 when larger pipeline projects, including Blackcomb and Hugh Brinson, are anticipated to start. The Permian should be well positioned to supply the new Golden Pass, Rio Grande, and Port Arthur LNG projects, all located in Texas.