Investing.com -- Bank of America raised its second-half 2026 Henry Hub natural gas price forecast to $3.8 per million British thermal units from $3.6 previously, citing tight supply balances and the risk of gas inventories entering winter below 3.8 trillion cubic feet.

Natural gas prices averaged higher year-over-year from January 2025 to January 2026, but mild temperatures from late February through April weighed on domestic prices. Since February, gas prices have averaged lower year-over-year, though balances have tightened to levels not seen since 2024.

The bank noted that while gas production continues to grow, increased demand from liquefied natural gas facilities and the power sector, along with reduced Canadian imports, have offset supply gains. Prices have recovered since April lows.

Gas-fired power plants have taken a higher-than-normal share from coal since Henry Hub reached its April lows. Renewable energy continues to expand, with solar setting records and wind achieving its best June performance.

LNG feedgas demand in the second quarter of 2026 averaged approximately 3.1 billion cubic feet per day higher year-over-year. Bank of America expects U.S. LNG feedgas demand to rise by nearly 4 billion cubic feet per day over the next 18 months as additional facilities enter service.

In Canada, demand from LNG Canada trains 1 and 2 has exceeded Western Canada production growth since last summer, leading Canada to reduce pipeline gas exports to the U.S. Costa Azul LNG on Mexico's west coast recently began taking feedgas.

Natural gas production remains below December 2025 highs despite increased activity in Haynesville and Appalachia. In the Permian basin, current strong Waha prices suggest less stranded gas than expected. Bank of America maintained its 2027 Henry Hub forecast at $4 per million British thermal units.