Gas prices enter a bearish spring amid crude market volatility

Henry Hub is entering a bearish spring, driven by a potent mix of waning heating demand, surging supply, and mounting macroeconomic uncertainty. The result? Significant downward pressure on gas prices – and more questions than answers for the months ahead. 

In this update, we explore: 

• Can strong LNG exports continue to buoy the market against overwhelming supply growth? 

• Will the current storage deficit disappear entirely by next month? 

• How might falling crude prices ripple through associated gas production? 
  

Read on for what’s driving the market—and what could come next.

Storage outlook: deficit fading fast 

Storage levels – once a major source of bullish sentiment – are rapidly normalising. Analysts now expect the storage deficit compared to five-year average levels to be nearly eliminated by next month. Combined with strong production, this outlook has only added to the bearish tone sweeping through the market. 

Crude oil’s domino effect 

The crude oil market isn’t offering much relief, either. Front-month WTI prices plunged below US$60/bbl last week – a level not seen since 2021. Although prices have rebounded slightly to around US$61.25, they remain roughly 23% below January’s near-$80 highs. 

This drop was triggered by US President Donald Trump’s recent tariff announcements, which have raised fresh concerns about global economic growth and energy demand. That pressure was compounded when OPEC+ confirmed plans to ramp up its supply hike in May. 

While the immediate impact on associated gas production may be limited, sustained lower oil prices could start affecting development plans and rig counts. The lag time – typically six to nine months – means current price levels are shaping decisions that will influence supply later this year and into 2026. 

Cost pressures rising 

Adding to the challenge, the new tariffs are also expected to push Lower 48 drilling and completion costs higher – by an estimated 4% on average. For producers already working with tight margins, this added cost pressure could further dampen activity levels. 

Looking ahead for the gas market 

WTI prices holding in the US$55–$60/bbl range may not spark an immediate collapse in rig counts, but they are below the planning assumptions of many operators. A deeper slide – particularly below US$50/bbl – would likely have a far more significant effect, potentially reshaping oil and associated gas supply forecasts heading into 2026. 

In short: the market is entering a period of recalibration. Supply remains strong, demand uncertain, and geopolitical risks elevated. We’ll be watching closely to see if LNG exports and summer cooling demand can provide any meaningful lift – or if the bearish winds will continue to blow. 

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