Highlights from our winter ’26/’27 natural gas outlook webinar

Key Takeaways

• Natural gas prices may be lower this winter. Forecasters expect a strong El Niño, which usually means milder temperatures and less demand for heating.
• Natural gas futures look historically low. Calendar 2027 prices have historically been higher 95% of the time.
• Volatility is still built in. Storage capacity hasn’t kept pace with market growth, so cold snaps can still spike prices.
• Southeast relief is on the horizon. Several major pipeline projects are in development but won't arrive until 2029 or later.

What it means for you: Today's prices may be an opportunity, but a flexible, well-planned energy strategy is still your best protection.

For businesses with significant commercial energy use, natural gas can be one of the hardest line items to forecast, and this winter brings both encouraging signals and familiar risks. At our Sept. 24 Winter ’26/’27 Natural Gas Outlook webinar, co-hosted with SCANA Energy, we heard from IGS Energy's Paul Leanza, Director of Gas Supply, along with SCANA Energy’s Paul Herron, Director of Gas Supply, and Lauren Atkins, Manager of Gas Supply. Here’s what they covered.

What's driving volatile winter prices

U.S. natural gas production has grown about 50% in 9 years, to roughly 110 billion cubic feet a day (Bcf/d). Demand is growing with it. Liquefied natural gas (LNG) feedgas peaked at 19.5 Bcf/d last January and could reach 30 Bcf/d by 2030. Data centers are also reshaping energy consumption trends, and Paul Leanza expects data centers to add another 6-8 Bcf/d by 2030.

Natural gas storage hasn't kept up. Capacity barely grew as the industry expanded, and when inventories fall behind the 5-year average, prices climb. About 200 Bcf of new storage is planned by 2032, but that only keeps pace with growth.

Cold snaps expose that gap. Last January, freeze-offs cut about 12 Bcf/d of production while power generators bid up supply, pushing Gulf Coast natural gas prices to about $30/MMBtu for several days. Because just 5 days of $10 gas can lift a $4 monthly contract to nearly $5, January now carries a premium: The January to February spread has widened from a historical 8-10 cents to 40-60 cents further out the forward curve.

Reading the forecast: El Niño and natural gas futures

Forecasters expect a strong El Niño, which typically brings a warmer winter to the northern U.S., though cold shots are still possible. In the last two El Niño winters, natural gas prices fell below $2.

Natural gas futures reflect that. As of the webinar, this winter traded around $3.30, roughly 70 cents below next winter, and calendar 2027 sat near the fifth percentile of its historical range. Paul Leanza's takeaway: For businesses that hedge and haven't covered 2027, history suggests it's a favorable time to consider it, though prices can still move lower in a strong El Niño year.*

Understanding basis in the Southeast

Lauren Atkins explained that basis, the price difference between a local delivery point and the Henry Hub benchmark, varies widely across the region. On Southern Natural Gas (SONAT) and Transco Zone 4, basis for Winter 2027-28 is trading below this winter, a sign the market expects some relief. Transco Zone 5 South has held at $2 or more, a premium for deliverability where supply and storage are limited.

Pipeline relief is coming. Until then, watch for OFOs.

Southeast demand is outpacing pipeline capacity. SONAT reports demand up 68% against 31% capacity growth. Paul Herron walked through five interstate pipeline projects intended to close that gap, starting with Transco's 1.6 Bcf/d Southeast Supply Enhancement Project in late 2027. However, several others won't enter service until 2029 or later.

In the meantime, operational flow orders (OFOs) remain a key risk. Pipelines issue them to protect their systems, requiring shippers to keep supply and usage in balance or face penalties, most often during cold snaps, mild holiday periods, or equipment outages. Notice is usually about a day, but it can be as little as 4 hours.

Southeast winter risks are real, but manageable

Effective energy management starts with the right plan. Here’s what to consider:

• Know your delivery point: In the Southeast, basis and pipeline constraints can matter as much as the Henry Hub price.
• Prepare for OFOs: Know which pipeline serves you and how quickly you can adjust usage on short notice.
• Revisit your hedge position: With 2027 prices near historic lows, review what’s covered and what isn’t.

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5 webinar data points worth a closer look

Here's additional detail on five data points from the webinar that could help inform your next energy decision.

• Southeast pipeline timeline: New capacity arrives in stages through 2032.
  • 2027: Transco Southeast Supply Enhancement (1.6 Bcf/d)
  • 2028: Tennessee Gas Pipeline’s Mississippi Crossing (2.1 Bcf/d) and phase one of SONAT South System Expansion 4
  • 2029: Phase two of SONAT South System Expansion 4 (1.3 Bcf/d total)
  • 2030: Elba Express Bridge (325 MMcf/d) and phase one of SONAT Southeast Connector
  • 2031-32: Phases two and three of SONAT Southeast Connector (2.5 Bcf/d total)
• Basis, and whether expansion is priced in: SONAT's winter 2026-27 basis peaked near 55 cents in early summer and eased to about 38 cents by late August, while winter 2027-28 trades in the upper 20s. Transco Zone 5 South has run north of $2.50. Lauren Atkins noted that SONAT and Transco Zone 4 curves appear to already reflect planned expansions, though LNG competition on cold days and project delays could change that.
• Supply responds to low prices more than high ones: When prices fell below $2 in 2023-24, producers cut output from about 105 to 98 Bcf/d. When Gulf prices hit $30 last January, LNG feedgas dropped only from 19 to 12 Bcf/d, leaving another 8-9 Bcf/d that could have been resold into the U.S. market.
• Natural gas futures by year: As of the webinar, calendar 2027 futures (just under $3.40) sat near the fifth percentile of their historical range, 2028 near the 25th, and 2029 near the 50th, which Paul Leanza called a coin flip. January 2027’s winter premium over February has also eased, from 60-65 cents in March to about 35 cents.
• OFO signals: SONAT typically considers an OFO when its system average falls to about 45°F or below in winter, or 85°F in summer. Last winter, there were only 4 days below 45°F without one. Transco has cut bracketed OFOs from 65 to one in winter.

Further reading

• Market fundamentals: Understanding Today's Energy Market explains how LNG exports, storage expectations, and weather now interact with traditional seasonal price cycles.
• Strategy and risk management: Natural Gas Strategies compares pricing options, including Regional Index Plus, which floats both the energy and basis components.
• Tools and references: NYMEX Monthly Settles lets you compare historical natural gas futures settlements with today's prices.