Goldman Sachs’ co-head of Global Commodities Research, Samantha Dart, issued a report Tuesday indicating that U.S. natural gas markets are currently undervalued, maintaining an optimistic price outlook for the upcoming summer season. The analysis projects Henry Hub prices to reach $3.90/mmBtu during the balance of Summer 2025, citing
strengthening market fundamentals and normalized positions by managed money investors.
The report acknowledges that natural gas output levels may persist higher than initially projected through the early summer period, though a decline is anticipated to begin in June. Dart attributes the recent production surge to previously inventoried wells now coming online, including both drilled but uncompleted wells (DUCs) and delayed turn-in-line wells (DTILs). This increase is characterized as a temporary phenomenon, driven by strong price incentives from first-quarter 2025, when Henry Hub prices averaged in the upper $3/mmBtu range.
According to the analysis, the Appalachian region is expected to experience production declines as local market conditions evolve. This forecast is primarily based on decreased heating demand in the Northeast, which is putting downward pressure on local wellhead prices. The temporary boost in regional production is likely to face significant decline rates for new wells starting in June.
The report highlights an accelerated recovery in power consumption compared to Goldman’s models, particularly noting increased switching from coal to natural gas in power generation. Current data shows that natural gas now comprises 70% of U.S. thermal generation, marking the highest level recorded this year.
This shift in power generation mix reflects utilities’ response to lower gas prices, with increased coal-to-gas switching becoming more prevalent. The trend suggests a growing preference for natural gas among power producers, contributing to stronger demand fundamentals in the market.
EQT’s recent earnings call provided additional context for the current production landscape. The company confirmed that the observed surge in output largely stems from previously inventoried wells now coming online, aligning with the strong price environment seen in early 2025. This supports the assessment that the production increase represents a one-time boost rather than a sustainable trend.
The analysis suggests that market dynamics are poised for a shift, with production levels expected to decline as the temporary surge from inventory wells subsides. This anticipated reduction in supply, combined with robust power sector demand and normalized investor positioning, supports Goldman’s bullish price outlook for the summer period.
The Northeast market, particularly in Appalachia, faces specific challenges as reduced heating demand impacts local pricing. However, the broader market appears positioned for potential price
appreciation, given the combination of expected supply moderation and sustained demand growth from the power sector.
The current market condition reflects a complex interplay of factors, including inventory management, power sector dynamics, and regional price differentials. While production levels have remained elevated longer than initially expected, the fundamental drivers point toward a tightening market environment as the summer season approaches.
The assessment indicates that recent market pricing may not fully reflect the underlying supply-demand balance, particularly considering the temporary nature of current production levels and the structural shift in power sector consumption patterns. This misalignment between current prices and market fundamentals supports Goldman’s view that natural gas prices are currently oversold relative to their near-term potential.