Goldman Sachs is upbeat about U.S. natural gas prices, projecting a target of $4.50/mmBtu for Summer 2026 at Henry Hub. However, the bank notes that this forecast could be at risk if producers delay their investments. Goldman predicts that to achieve steady U.S. gas production growth until 2026, more drilling activity will be essential. Current investment levels may not suffice to meet the rising demand.

Goldman Sachs Recommendation

The bank advises taking a long position in April 2026 Henry Hub contracts, as they see favorable conditions and limited supply response. Henry Hub, located in Erath, Louisiana, is the main price reference for U.S. natural gas. It is the delivery site for futures contracts traded on the New York Mercantile Exchange (NYMEX). The $4.50/mmBtu target represents the expected price per million British thermal units at Henry Hub. This pricing benchmark is akin to “WTI crude” for oil in the natural gas market. We believe that the outlook for U.S. natural gas is solid, warranting the $4.50/mmBtu target for Summer 2026 contracts. The main risk lies in whether producers can ramp up investments in time to meet future demand. This creates opportunity for traders who align with our long-term view.

Short Term Strategy

In the short term, we see any price dips as buying opportunities. The latest report from the U.S. Energy Information Administration shows natural gas storage at 2,893 billion cubic feet, which is over 25% higher than the five-year average and is currently putting downward pressure on prices. This situation offers a good entry point for longer-term investments. Concerns about investment levels reflect the current state of drilling activity. The Baker Hughes rig count from early June 2024 indicates that there are only about 98 active natural gas rigs, a significant reduction from over 150 a year earlier. This lagging investment poses challenges for the supply to quickly meet the anticipated demand surge. Looking ahead, a significant boost in demand is almost certain because new liquefied natural gas (LNG) export facilities like Plaquemines and Golden Pass are set to open by 2025. This expected rise in demand will conflict with slow production growth from current low drilling rates. We see this as a main driver for higher prices. History shows how rapidly this market can tighten. For example, prices soared to over $9.00/mmBtu in 2022 due to supply concerns. While we aren’t predicting another sharp spike, it highlights the considerable upside if production can’t keep up with demand. Current market complacency about future supply could be an opportunity for us. Traders should capitalize on today’s soft prices over the next few weeks to build long positions in deferred contracts like the April 2026 Henry Hub futures. We recommend using options or futures to adopt a bullish stance, taking advantage of what we believe is a temporary gap between current prices and future realities. Create your live VT Markets account and start trading now.

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