US natural gas production is showing price sensitivity, while downside risk in 2027 still warrants attention

Overview

This report is Goldman Sachs' commentary on the US natural gas market, focusing on US dry gas production, especially in the Haynesville region, and how growth responds under different Henry Hub price levels. The report notes that Henry Hub has recently moved back above $3/mmBtu, but the more important signal is that Haynesville production growth has slowed in a low-price environment, showing that supply does not continue expanding at every price level.

Core views

The core view is that the US natural gas market is not tight in summer 2026, and prices are broadly in a market-clearing range; however, Haynesville production is more sensitive to prices and drilled well inventory than the market generally expected at the start of the year. In the short term, even if Haynesville remains flat for the rest of the summer, supply tightness is still unlikely in winter because the 1Q26 rig count rose and new Permian pipeline capacity in 2H26 will drive associated gas growth. In the medium term, incremental Permian associated gas in 2027 could push the market closer to congestion, so Henry Hub price risk is skewed to the downside, although a more restrained Haynesville growth path could mitigate this risk.

Analysis framework

The report assesses the elasticity of US natural gas supply to prices by comparing Henry Hub prices, intra-year changes in Haynesville production, production growth in the same period last year, drilled well inventory conditions, rig counts, and added Permian pipeline capacity, and incorporates this supply response into its judgments on the summer 2026 and 2027 supply-demand balance.

Methodology notes

• Commodity fundamentalsNatural gas supply-demand balance analysis

  Price-range equilibrium

  The report does not view Henry Hub in summer 2026 as following a single path, but instead judges that there is a market-clearing price range, roughly between the current $3.17/mmBtu strip and the $3.50/mmBtu forecast.

• Supply elasticityObservation of production price sensitivity

  Haynesville production response

  By comparing Jan-May prices and changes in Haynesville production in 2025 and 2026, the report evaluates whether lower prices and lower drilled well inventory are suppressing dry gas production growth.

• Medium-term scenario2027 congestion risk assessment

  Incremental Permian associated gas

  The report incorporates new pipeline capacity in 2H26 and Permian associated gas growth into 2027 into its analysis, concluding that this could bring summer 2027 closer to supply congestion and thus weigh on Henry Hub prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Henry Hub natural gas

  Core price indicator and forecast target

  Strengths

  The slowdown in Haynesville production shows that low prices can restrain supply, which may help limit downside in prices.

  Weaknesses

  Permian associated gas growth and potential congestion in 2027 skew forecast risks to the downside.

  Comparison

  The market-clearing range for summer 2026 roughly spans the current $3.17/mmBtu strip to the $3.50/mmBtu forecast; prompt is near $3/mmBtu.

  Risks

  Weather changes, storage injections, production recovery, Permian pipeline startups, and algorithmic trading linkages could all amplify volatility.

• Haynesville natural gas production

  Key observation target for US dry gas supply elasticity

  Strengths

  Production growth has slowed in this year's low-price environment, showing greater price discipline on the supply side.

  Weaknesses

  Maintenance, drilled well inventory, rig counts, and seasonal factors can interfere with judgments about production trends.

  Comparison

  It increased by about 800 mmcf/d from December 2024 to May 2025; it declined by about 200 mmcf/d from December 2025 to May 2026.

  Risks

  If higher rig counts translate into incremental wells in 4Q26, supply could increase again.

• Permian associated gas

  Source of supply growth from winter 2026 to 2027

  Strengths

  New pipeline capacity can unlock production and support winter supply.

  Weaknesses

  A sharp increase in associated gas could push the summer 2027 market closer to congestion.

  Comparison

  The report assumes Dec27 Permian gas production reaches 27.8 Bcf/d, 3.4 Bcf/d above current levels.

  Risks

  Pipeline startup timing, oil and gas production pace, and regional congestion will affect the actual supply shock.

• TTF / European natural gas

  Reference for recent trading linkage

  Strengths

  At the trading level, it may influence short-term sentiment in Henry Hub prices.

  Weaknesses

  The report believes US gas fundamentals have not changed materially because of Hormuz disruptions, and that the linkage between Henry Hub and TTF comes more from trading algorithms than from fundamentals.

  Comparison

  Rising European gas prices and part of the synchronous move in Henry Hub do not equate to tighter US supply and demand.

  Risks

  If geopolitical disruptions change global LNG flows or risk appetite, they could still affect US natural gas prices through trading channels.

Key data

• Report date2026-05-19The cover page shows Commodities Research 19May2026.
• Recent Henry Hub priceMoved back above $3/mmBtuFor the first time since late March.
• Bal Sum26 strip$3.17/mmBtuThe report believes the current level does not indicate market tightness.
• Goldman Sachs 2027 Henry Hub forecast$3.50/mmBtuThe report says risks to this forecast are skewed to the downside, mainly due to 2027 congestion risk.
• 2025 Haynesville production change+800 mmcf/dFrom December 2024 to May 2025, supported by higher prices and more inventory wells.
• 2026 Haynesville production change-200 mmcf/dFrom December 2025 to May 2026, it declined against a backdrop of a Jan-May26 Henry Hub average price of $3.19/mmBtu, with April and May below $3.
• April 2026 Haynesville comparison+200 mmcf/d vs +700 mmcf/dIn April 2026, production was up only about 200 mmcf/d versus December 2025; in the same period of 2025, it was up about 700 mmcf/d.
• 2H26 incremental Permian pipeline capacity4.5 Bcf/dThe report expects this to drive a significant increase in winter Permian associated gas.
• Dec27 Permian gas production assumption27.8 Bcf/dAbout 3.4 Bcf/d above current levels.

Impact & implications

In terms of investment implications, the report suggests that short-term Henry Hub price fluctuations should not be explained only by weather or linkage with European gas prices; greater attention should be paid to whether the US supply side slows spontaneously at low prices. If Haynesville growth is more disciplined, downside risk to 2027 prices may be limited; but if Permian associated gas rises sharply as expected, the market may still move closer to congestion and weigh on Henry Hub.

Risks

• A significant increase in Permian associated gas in 2027 could push the US natural gas market closer to congestion and weigh on Henry Hub.
• Haynesville rig counts rose significantly in 1Q26, which could bring incremental wells in 4Q26 and change the supply trajectory.
• Weather forecasts, storage injections, and maintenance factors will affect summer price and production readings.
• Algorithmic trading linkage between Henry Hub and TTF may cause short-term moves that are not fully consistent with US fundamentals.
• Pages 3 to 5 outside the main body are primarily disclosures and legal statements, and do not provide further fundamental details.

What to watch

• Whether Haynesville production remains flat or resumes growth through the rest of the summer.
• How Henry Hub prices react within the $3/mmBtu to $3.50/mmBtu range.
• Whether US natural gas storage injections continue to come in below market consensus.
• Whether the Haynesville rigs added in 1Q26 translate into new wells in 4Q26.
• The startup progress of 4.5 Bcf/d of new Permian pipeline capacity in 2H26.
• Whether Dec27 Permian gas production approaches the 27.8 Bcf/d assumption.