The US Energy Information Administration sees ample natural gas supplies, continued renewable power growth, and declining coal generation shaping US energy markets through 2027, according to its August Short-Term Energy Outlook on Tuesday.
The EIA forecasts US liquefied natural gas exports will average 16.5 billion cubic feet per day in Q3 2026, down 0.2 Bcf/d from its previous outlook.
International LNG prices rose in July to levels last seen in early April as tanker traffic through the Strait of Hormuz slowed after attacks on vessels resumed July 7.
Freeport LNG began maintenance July 10, temporarily affecting 2 Bcf/d of nominal export capacity, with the work expected to finish in late August.
Even with Freeport operating fully, limited growth in US LNG export capacity should constrain shipments despite elevated price spreads between the US, Europe and Asia, the EIA said.
Maintenance at Freeport and other Gulf Coast LNG terminals reduced feedgas demand in June and July, helping South Central storage reach 5% above its 2021-2025 five-year average.
The EIA estimates US natural gas pipeline exports will average 9.6 Bcf/d in 2026 and increase to 10 Bcf/d in 2027, from 9.5 Bcf/d in 2025.
The Energia Costa Azul LNG terminal shipped its first cargo July 8, adding 0.4 Bcf/d of nominal export capacity in Mexico as demand from new gas-fired plants rises.
The EIA forecasts Henry Hub gas will average $2.87/MMBtu in Q3 2026, 50 cents below its previous outlook, as lower LNG feedgas demand and record production weigh on prices.
The agency forecasts natural gas inventories will reach 3,985 Bcf at the end of October 2026, 19 Bcf above its July outlook and 5% higher than the five-year average.
"More natural gas in inventories in the fall season provides a cushion for increased heating-related consumption during the winter," EIA Administrator Tristan Abbey said.
High storage levels should keep Henry Hub below $3/MMBtu until November, while the EIA forecasts an average of $3.03/MMBtu during the final five months of 2026.
In the power sector, US electricity generation rose 37 billion kilowatt-hours, or 1.8%, in H1 2026 from a year earlier as electricity demand continued to grow.
The EIA lowered its Texas electricity demand forecast after the governor paused new data center development, with load growth now projected at 6% in 2027 versus 14% previously.
Solar and natural gas generation led power growth in 2026, while new capacity, including the 3.7-gigawatt SunZia wind farm, should sustain renewable generation growth through 2027.
Solar generation rose 21%, and wind generation increased 6% in H1 2026, while hydropower climbed 9%; the EIA forecasts a 3% hydropower decline in H2 2026 amid worsening western drought.
Lower gas prices are supporting gas-fired generation, with the EIA forecasting Henry Hub prices will average 2% lower in 2026 and 4% lower in 2027.
The EIA forecasts US natural gas generation will rise by 30 billion kilowatt-hours, or 2%, in 2026 and 44 billion kWh, or 3%, in 2027.
US coal-fired generation fell 39 billion kWh, or 11%, in H1 2026, and the EIA forecasts another 15 billion kWh, or 4%, decline in H2 26 and an 18 billion kWh, or 3%, drop in 2027.
US coal exports rose 32% over the year in June, prompting the EIA to raise its 2026 export forecast to 102 million short tons from 98 million short tons previously.
Metallurgical coal exports increased over the year in each of the first six months of 2026, likely reflecting the opening of Warrior Met Coal's Blue Creek mine and the reopening of two other mines.
Steam coal exports fell 11% on average over the year in Q1 2026 before recovering in April, May and June as global coal prices rose on seasonal restocking, tighter supply and Iran conflict uncertainty.
Higher gas prices also encouraged coal switching in Europe and Asia, while weather changes and increased renewable curtailments in China lifted coal use.