UBS reduced its U.S. natural gas price forecasts through mid-2027, citing sustained high inventories and steady production that have kept downward pressure on prices despite robust liquefied natural gas (LNG) exports.
The bank lowered its price targets by $0.20 per million British thermal units (mmbtu) for December 2026, March 2027 and June 2027, reflecting expectations that abundant supply will continue to outweigh demand growth in the near term. Current U.S. natural gas inventories stand at 3.15 trillion cubic feet, approximately 7.8% above the five-year average, according to the Energy Information Administration (EIA).
Analysts project inventories could climb to the high 4 trillion cubic feet range by the end of the injection season in October, a level that would further ease supply tightness. U.S. dry gas production has held steady between 110 billion and 111 billion cubic feet per day (bcfd) since February, though year-on-year supply growth has slowed from 5.8 bcfd in February to 2.8 bcfd in July.
LNG exports, which peaked at a record 18.5 bcfd in March, have since declined to 16.6 bcfd in July. Despite this pullback, UBS expects exports to reach a new high only toward year-end, keeping the market well supplied in the interim. "This suggests that supply growth outpaced demand growth in recent months," said Giovanni Staunovo, UBS strategist.
The 2027 outlook remains constructive relative to current spot prices, though Staunovo characterized the forecast as conservative and broadly aligned with prevailing market pricing.
