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California Natural Gas Prices Hit Record Lows Amid High Storage Levels, Weak Power Demand, EIA Says

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Average natural gas spot prices at major California trading hubs fell to record lows during the first five months of 2026, pressured by above-average storage inventories and declining demand from gas-fired power generation, the US Energy Information Administration said Tuesday.

Prices at Northern California's PG&E Citygate and Southern California's SoCal Border Average reached record lows, while prices at SoCal Citygate fell close to historic lows but remained above some levels recorded in 2024.

Higher-than-average natural gas inventories in the Pacific region have been a key driver of the price weakness. While storage levels in the South Central, Midwest and East regions have remained near their five-year averages, Pacific region inventories have exceeded the five-year average by over 10% since early December 2025.

As of May 22, Pacific region storage stood 30.9% above the five-year average, or roughly 69 billion cubic feet, adding downward pressure on regional prices.

At the same time, California's demand for natural gas in electricity generation has continued to decline as renewable energy sources gain market share.

Increased solar and renewable generation, combined with growing battery storage capacity, has reduced the need for gas-fired power plants, particularly during evening peak-demand periods.

Natural gas consumption in California fell to a record low 4.8 billion cubic feet per day in 2025, down 7% from 2024, according to data from the Natural Gas Monthly report.

California natural gas hubs have traditionally traded at a premium to Henry Hub, the US benchmark. However, elevated storage inventories and weaker power-sector demand have pushed California spot prices below Henry Hub throughout 2026.

The discount to Henry Hub was widest in January, marking the largest gap on record for each of the state's major trading hubs. Although the price differential has narrowed in recent months, spot prices at all three California hubs remain below Henry Hub levels.

Price: $16.43, Change: $+0.28, Percent Change: +1.73%

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