The U.S. natural gas market started May under pressure as mild weather, strong storage injections, and soft seasonal demand weighed on prices. Sentiment improved later in the month, however, as LNG feedgas demand recovered and market balances tightened.
Henry Hub next-day prices averaged $2.886/MMBtu in May, up 4.0% from April but still below May 2025 levels. Prices fell to a monthly low of $2.441/MMBtu on May 6 during LNG maintenance outages and high storage levels, before rebounding above $3.10/MMBtu by late May as LNG facilities returned to service.
Regional volatility was mostly concentrated in the Northeast, where temporary pipeline constraints briefly pushed Transco Zone 6 NY prices sharply higher before conditions normalized. In the Permian, ongoing takeaway constraints continued to weigh on Waha pricing and forward basis levels.
Market Activity
- LNG maintenance pressures Gulf Coast balances:
- Maintenance at Corpus Christi, Cameron, Freeport, and Golden Pass temporarily reduced LNG feedgas demand and loosened Gulf Coast balances during May. Feedgas flows fell to a roughly 16-week low around May 19 before recovering to approximately 18.4 Bcf/d by month-end as facilities returned to service, helping support stronger prompt pricing.
- Mild weather supports storage injections:
- Mild weather limited heating and cooling demand throughout May, allowing storage injections to remain strong and inventories to stay roughly 140 Bcf above the five-year average. Lower 48 dry gas production averaged 109.4 Bcf/d, slightly below April levels but not enough to materially tighten supply conditions.
Price Action
- Henry Hub recovered steadily after early-May weakness:
- Henry Hub opened May at $2.561/MMBtu before falling to a monthly low of $2.441/MMBtu on May 6.
- Prices strengthened steadily through the remainder of the month as LNG demand recovered and oversupply concerns eased.
- The monthly high of $3.227/MMBtu was reached on May 19, with the market closing at $3.108/MMBtu on May 26.
- The intra-month trading range totaled $0.786/MMBtu, notably narrower than the elevated volatility seen during February’s winter market conditions.
Cross-Market Dynamics
- The Northeast experienced the sharpest regional price volatility during the month:
- Transco Zone 6 NY surged to $6.264/MMBtu on May 4–5 during a brief pipeline constraint event.
- Tenn Zone 6 Del simultaneously climbed to $4.501/MMBtu.
- Transco Zone 6 NY basis moved from a $0.570/MMBtu discount to Henry Hub at the start of May to a $3.193/MMBtu premium during the spike, before reverting to a $0.816/MMBtu discount by month-end.
- Columbia Gas Appalachia closed May at a $0.789/MMBtu discount to Henry Hub.
Cross-Regional Dynamics
- Waha weakness remained a major structural issue:
- Waha pricing remained deeply negative throughout May due to persistent Permian takeaway constraints and weak regional demand.
- Waha averaged approximately -$3.42/MMBtu outright and -$6.31/MMBtu versus Henry Hub.
- Market concerns continued to center on rising associated gas production and limited near-term infrastructure relief.
- Energy Transfer’s Hugh Brinson Pipeline remains the market’s primary expected solution, with partial relief anticipated in 2026.
Curve Structure
- Forward curves reflected persistent Permian oversupply pressure:
- Waha June basis remained near record lows around -$6.47/MMBtu through mid-May.
- Forward curves continued to reflect expectations for Permian takeaway constraints into late 2026.
- Rising crude prices near $100/bbl reinforced expectations for stronger associated gas production growth across the Permian Basin through 2026–2027.
Price Volatility
- Volatility eased overall, except in the Northeast:
- Price volatility eased across most U.S. gas hubs after the extreme winter swings seen earlier in 2026.
- Henry Hub volatility rose modestly in May (CV 7.44% vs. 4.78% in April) but remained well below January’s polar vortex levels.
- The Northeast was the main exception, driven by early-May pipeline constraints:
- Transco Zone 6 NY CV: 52.85%
- Tenn Zone 6 Del CV: 31.60%
- Appalachian hubs remained closer to normal seasonal ranges.
Something to Watch
- Hugh Brinson Pipeline startup: A partial startup expected in early Q3 could provide the first meaningful Permian takeaway relief and may determine whether Waha basis begins recovering ahead of winter.
- LNG feedgas demand recovery: Corpus Christi Stage 3 commissioning activity could push feedgas demand toward 18–19 Bcf/d by year-end, further tightening domestic balances.
- Summer storage trajectory: Inventories remain comfortably above five-year averages, though sustained summer heat could quickly reduce the surplus.
- Northeast basis volatility: The early-May price spike highlighted the market’s ongoing sensitivity to infrastructure constraints during periods of elevated demand.
Note: All figures, prices and market activity referenced in this report are based on the period 1-29 May.
