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US Gas Power Demand Trails 2024 Levels as Renewables Gain Share, UBS Says

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US gas power demand remains below 2024 levels as renewables gain market share, while ample storage weighs on the near-term outlook, according to a UBS note on Wednesday.

The US Energy Information Administration reported 163.2 million megawatt-hours of gas consumption for power generation in June, down about 1% from a year earlier and 3% below June 2024.

Gas demand for power generation rose 2% over the year in the first half of 2026 but remained 3% below the 2024 pace, UBS said.

Gas accounted for 38.4% of total power generation demand in the first half of 2026, down from 38.5% in H1 2025 and 41.3% in H1 2024.

UBS forecasts gas power generation demand will rise 3.7% in 2026, although data through June suggests the outlook may face downside risk.

Coal demand for power generation fell 11% over the year in Q2, while gas demand rose about 2.5%, indicating a shift toward gas generation.

Lower gas prices likely supported some of that switch, UBS said, with Henry Hub front-month prices averaging about $2.79 per million British thermal units during Q2.

Coal's share of total power generation fell to 14.4% in the first half of 2026 from 16.6% in 2025 and 14.6% in 2024, while coal demand declined 11% over the same period.

Solar power generation consumption climbed about 22% over the year in H1 2026 and rose about 68% from H1 2024, UBS said.

Renewable power generation, excluding solar, increased 6% over the year through June and was 8% above H1 2024 levels, indicating continued growth across renewable sources.

Cheniere Energy (LNG) said Monday that its Corpus Christi LNG facility was undergoing maintenance, with feedgas flows falling from about 3.7 billion cubic feet per day to 2.44 Bcf/d.

Flows then rebounded to 3.66 Bcf/d Wednesday, suggesting the maintenance work could be nearing completion, according to UBS.

Freeport LNG exports averaged 1.35 Bcf/d since July 10, versus 2.02 Bcf/d in H1 2026 and 2.29 Bcf/d during the first week of July.

The weekly storage forecast calls for a 36 Bcf build, versus 18 Bcf in 2025 and a 33 Bcf five-year average, while LNG exports averaged 17.8 Bcf/d over four weeks and 18.6 Bcf/d year to date.

Consensus estimates indicate domestic gas balances are 179 Bcf above the five-year average, leaving the market 0.5 Bcf/d oversupplied.

Natural gas prices have lagged oil and broader commodities in 2026, with front-month gas down 6.9% year to date, versus a 27.1% gain for the Goldman Sachs Commodity Index and a 43.9% gain for WTI.

Front-month natural gas traded between $2.95/MMBtu and $5.29/MMbtu in 2025, ending 1% higher, while the Goldman Sachs Commodity Index was flat and WTI fell 20%.

UBS forecasts Henry Hub natural gas at $3.75/MMbtu in both 2026 and 2027, while Lower 48 storage stood 0.4 Bcf/d above the five-year average in the first half of 2026.

UBS expects the market to gradually tighten through the second half of 2026 and sees long-term Henry Hub prices at $3.50/MMbtu to $4/MMbtu as production grows to meet higher LNG exports and power demand from artificial intelligence and data centers.

Faster production growth from exploration and production companies remains the key supply risk, with oil prices, Permian pipeline expansion and Haynesville inventory also affecting output.

Weather could shift residential and commercial demand by about 2 Bcf/d annually, while LNG delays, utilization, and greater use of renewable energy and storage could affect demand, according to UBS.

Price: $282.38, Change: $-1.70, Percent Change: -0.60%

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