Key Moments
- Natural gas has gained over 17% in the past month and more than 36% year-to-date, despite a 0.5% pullback to $4.968 per MMBtu at 08:55 ET (13:55 GMT).
- Prices have risen about 60% since mid-October, with the prompt Henry Hub contract recently trading above $4.90.
- Morgan Stanley maintains its view that Henry Hub will exceed $5/mmbtu by early 2026, reiterating a $5 forecast for 2026.
Rising Prices Backed by Cold Weather and LNG Strength
Analysts at Morgan Stanley noted that natural gas prices have staged a robust advance since mid-October, driven by an early-season chill and record liquefied natural gas (LNG) flows. This backdrop has underpinned a significant rally in the market and, in their view, leaves additional upside potential.
At 08:55 ET (13:55 GMT), natural gas was trading 0.5% lower at $4.968 per million British thermal units (MMBtu). Even with this modest decline, prices remain more than 17% higher over the past month and over 36% above levels seen at the start of the year.
Henry Hub Benchmark and Price Dynamics
For several months, the U.S. bank’s analysts have been projecting that Henry Hub prices would move above $5/mmbtu by early 2026. Since mid-October, natural gas prices have climbed roughly 60%, with the front-month contract recently pushing past $4.90.
The Henry Hub, located in Erath, Louisiana, functions as a key distribution point for natural gas and is the designated pricing and delivery location for natural gas futures on the New York Mercantile Exchange. It is widely regarded as the primary benchmark for pricing natural gas across North America.
Fundamental Drivers: Storage, LNG, and Weather
The recent upswing in prices reflects a combination of better-than-feared end-of-season storage levels, record LNG flows, and a notably cold beginning to the winter season. December is now projected to be the coldest in roughly ten years, adding to demand expectations.
However, robust supply has muted some of the optimism regarding next year’s outlook. This has contributed to a sharply backwardated forward curve, in which current spot or cash prices exceed prices for future delivery.
Morgan Stanley’s Outlook and Forecast
In a note dated Dec. 3, Morgan Stanley’s analysts commented on recent production and demand trends.
“While we had assumed seasonal uptick in production, the last two weeks of data has trended a bit above our forecast. That said, this has been more than offset by stronger LNG feedgas flows and colder weather revisions,” analysts at Morgan Stanley said.
Despite the stronger-than-expected supply, the bank maintains a constructive stance on prices going forward. “We see further upside in the quarters ahead and reiterate our $5 forecast for 2026.”
Market Snapshot
| Metric | Value / Description |
|---|---|
| Price at 08:55 ET (13:55 GMT) | $4.968 per MMBtu |
| Intraday move | -0.5% |
| Performance over last month | Up over 17% |
| Year-to-date performance | Over 36% higher |
| Rally since mid-October | Around 60% |
| Prompt contract level in recent days | Above $4.90 |
| Morgan Stanley Henry Hub view | Break above $5/mmbtu by early 2026; $5 forecast for 2026 reiterated |
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