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New Pipeline Capacity, Rising LNG Demand Support Natural Gas Outlook, UBS Says

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Natural gas market conditions improved as new Permian takeaway capacity lifted regional prices and LNG exports rebounded, UBS said in a note on Wednesday.

Waha gas prices climbed to $0.89 per million British thermal units on June 16, marking a sharp recovery from negative $4.47/MMbtu a month earlier.

The Henry Hub-Waha differential also narrowed to $2.35/MMbtu from $7.43/MMbtu, reaching its tightest level since October 2025, UBS said.

The improvement followed the startup of the Gulf Coast Express Expansion, which increased capacity on the existing pipeline to about 2.6 billion cubic feet per day from roughly 2 Bcf/d. The project is one of three major Permian takeaway additions scheduled for 2026.

GCX transports natural gas from the Permian Basin to the Agua Dulce hub in South Texas.

The upcoming Blackcomb and Hugh Brinson pipelines should provide additional export routes and improve market access for Permian producers, according to UBS.

According to the Energy Information Administration's June Short-Term Energy Outlook, Permian gas production could increase by about 3.8 Bcf/d in 2027 versus full-year 2025 levels. That forecast supports the need for roughly 4.6 Bcf/d of new takeaway capacity, UBS said.

US liquefied natural gas exports rose to about 19.5 Bcf/d on June 17, the highest level since April 26 and more than 2.2 Bcf/d above the prior week.

Freeport LNG drove much of the increase after maintenance on one of its three trains concluded, restoring roughly 0.9 Bcf/d to 1 Bcf/d of exports. Cameron LNG also increased volumes by about 0.5 Bcf/d after completing work on Train 2, UBS said.

Golden Pass continued ramping production following its late-February startup, reaching a record 0.47 Bcf/d on June 17. The facility averaged about 0.4 Bcf/d during the past five days, UBS added.

The export recovery coincided with Tropical Storm Arthur, the first Gulf Coast storm of the 2026 hurricane season.

The storm was expected to move inland through southwestern Louisiana, highlighting ongoing weather-related risks to energy infrastructure.

The National Weather Service continues to forecast a below-normal hurricane season, expecting eight to 14 named storms, including three to six hurricanes, according to UBS.

Market expectations call for an 80 Bcf storage injection this week, compared with a 95 Bcf build a year earlier and a five-year average increase of 78 Bcf. At that level, domestic balances would remain 158 Bcf above the five-year average.

UBS expects Henry Hub natural gas prices to average $4/MMbtu in 2026 and $3.75/MMbtu in 2027 as market balances tighten.

The firm sees the market moving from an oversupply of about 0.7 Bcf/d in the third quarter of 2025 to a deficit of 0.5 Bcf/d to 1.0 Bcf/d by the second half of 2026, supported by rising LNG demand and power generation needs.

UBS expects Henry Hub prices to stabilize in a $3.50/MMbtu to $4.00/MMbtu range over the longer term, while winter weather remains the biggest near-term risk and could shift balances by as much as 1.5 Bcf/d, UBS added.

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