Natural Gas & Oil
May '26 Trading range: $2.65 to $2.73.
Despite the day-to-day uncertainty as to the outcome in the Middle East, US natgas prices are and should remain insulated from overseas disruptions as any gas that can be exported is already being exported.
Our market remains bearish but daily (downward) spreads are tightening.
LNG
- Global demand will remain elevated for years to come if it really takes the Ras Laffan LNG terminal 5 years to return to full output capacity.
- US LNG exports will remain at full capacity as long as Ras Laffan is down at any percentage.
Power
- Total 2026 demand forecast = +1.2% y/y.
- Anticipated summer peak demand is Residential +2.9%, C&I +2.6%.
- Weather should be the main factor as AI/DC demand is not expected until later in the year.
Today's Drivers
The Bears – ($2.60 to $1.90 range) – Oversupply, production increasing, mild weather,
The Bulls – ($2.95 to $3.25 range) – LNG exports, the market waking up to long term global disruptions and knowing they can add a premium to that whenever supply/storage tightens.
Today's Special – California Imports!
California's reliance on imported oil, exceeding 60%, stems from restrictive policies that have dismantled local production rather than a lack of resources in Kern County.
Despite requiring over 3,000 new wells annually, only 21 were drilled in 2024, shifting production to foreign sources with lower standards and creating environmental "carbon leakage."
Whenever CA pulls back on production, consumption continues, relying on markets with weaker labor laws, weaker environmental policies, traveling further distances, consuming more energy.
Until California stops using oil, it must produce oil if it wants to help the world.
You can read the full analysis at Californians for Energy & Science.
Our Nightcap Beats Their Recap