US natural gas is expected to do some heavy lifting in 2026 and beyond.
From powering the rapid expansion of data centres to helping refill European gas storage and offset disruptions to global LNG supply, the US gas market is taking on an increasingly important role. Europe is hoping for a mild winter. US producers would prefer a colder one after several years of historically warm conditions. Add a powerful El Niño into the mix, and the outlook becomes even more uncertain.
Joining host Paul Chapman is Emily Kyne, Vice President of Commodity Strategy and Trade Analytics at ARM Energy, to explore the state of the US natural gas market and what it means for energy markets, traders and consumers around the world.
Podcast Briefing: an Edited Q&A
The following Q&A has been adapted from the HC Commodities Podcast and edited for clarity and length.
Why is US natural gas becoming so important globally?
Paul Chapman: US natural gas seems set to play a much larger role in global energy markets. What's driving that?
Emily Kyne: The US is already the world's largest natural gas producer, with output reaching roughly 112-113 Bcf/d. Production growth has been supported by prolific shale resources and a wave of LNG export projects. As more liquefaction capacity comes online, US gas is increasingly serving not only domestic demand but also energy consumers across Europe and Asia.
Beyond LNG exports, natural gas is becoming central to discussions around power generation, industrial growth and data centre expansion. Those demand sources are making the market significantly more consequential than it was a decade ago.
The LNG Expansion Story
Paul Chapman: How significant is the next wave of LNG projects?
Emily Kyne: The scale is substantial. US LNG exports are currently around 20 Bcf/d, and sanctioned projects under construction could roughly double export capacity by the early 2030s.
What's remarkable is that this expansion has occurred without driving a sustained surge in US gas prices. Supply growth has largely kept pace with rising demand, demonstrating the productivity of US shale basins.
The challenge isn't resource availability. The challenge is moving sufficient gas to the Gulf Coast and building the infrastructure required to support continued growth.
Data Centres and the AI Power Boom
Paul Chapman: How much of the current excitement around natural gas is tied to AI and data centres?
Emily Kyne: It's becoming one of the most important demand drivers. Large data centres require reliable, continuous power, and natural gas remains one of the most practical ways to provide that scale of electricity generation today.
Current expectations suggest gas-fired power demand could increase significantly over the coming years. Part of that comes from new data centre construction, while part comes from coal retirements and coal-to-gas switching. Combined, those trends represent a meaningful increase in long-term gas demand.
The key point is that data centres don't just need power; they need dependable baseload power. That reliability requirement is creating new opportunities for natural gas.
Why Demand Growth Looks Different This Time
Paul Chapman: What makes the current demand outlook more compelling than previous cycles?
Emily Kyne: We're seeing multiple sources of demand growth emerge simultaneously. LNG exports continue to expand, coal retirements are increasing natural gas consumption in power generation, and data centres are creating an entirely new category of electricity demand. Individually, each would be significant. Together, they represent one of the strongest demand growth stories the sector has seen in years.
Current projections suggest power-sector demand alone could increase by roughly 20 Bcf/d over the coming decade, driven by data centres and coal-to-gas switching. At the same time, LNG export capacity is expected to continue growing rapidly.
Europe's Winter Challenge
Paul Chapman: Europe enters winter with gas storage below levels policymakers would ideally like to see. How concerned should the market be?
Emily Kyne: Storage levels are below historical norms and significantly lower than policymakers would prefer heading into winter. At the same time, global LNG supply has been disrupted by events affecting Qatar and the Strait of Hormuz.
That doesn't automatically mean Europe faces a crisis. A mild and windy winter would significantly reduce demand. The concern is that with lower inventories, even a relatively short cold spell could create substantial volatility in both gas and power markets. Markets can manage many challenges, but they become much less forgiving when storage inventories are tight.
To be a serious player in natural gas today, you have to think globally.
The Weather Variable
Paul Chapman: How important is weather to the outlook?
Emily Kyne: Weather remains one of the most powerful drivers of natural gas prices. A cold winter simultaneously increases demand while also risking supply disruptions through freeze-offs and operational challenges.
This year, a strong El Niño introduces additional uncertainty. Historically, that setup tends to favour warmer conditions across much of North America, which could reduce heating demand and keep inventories comfortable. Europe is a more complicated story because its winter weather is influenced by a range of atmospheric patterns beyond El Niño alone.
The market is effectively balancing between a benign weather scenario and one where even a brief cold event creates outsized price volatility.
Are Energy Markets Becoming More Volatile?
Paul Chapman: What's your view on volatility over the next decade?
Emily Kyne: We expect volatility to increase. Natural gas markets are gradually becoming less flexible. More gas is committed to long-term LNG contracts. More power demand is becoming baseload through data centres. As demand becomes less discretionary, the system has less ability to absorb shocks.
That means storage becomes increasingly important. When disruptions occur, price must do more of the work in balancing supply and demand.
The market may have abundant resources, but that doesn't necessarily mean those resources are available exactly where and when they're needed. That's where volatility emerges.
What Could Derail the Bullish Natural Gas Narrative?
Paul Chapman: There's a lot of optimism around gas demand. What are the biggest risks?
Emily Kyne: The first is that some demand projections prove too optimistic. The AI and data centre build-out could progress more slowly than expected. Power consumption could be lower. Technological improvements could reduce energy intensity.
The second is geopolitical. LNG markets have become increasingly global, and changes in trade flows or energy relationships can quickly alter investment decisions.
That said, when you look at current LNG commitments, planned infrastructure investment and power demand forecasts, the medium-term outlook for natural gas remains constructive.
The Investment Question
Paul Chapman: If you had to summarise the natural gas story in one sentence, what would it be?
Emily Kyne: Natural gas sits at the centre of several of the world's biggest energy trends at the same time: LNG growth, energy security, power demand and AI infrastructure. The resource exists, the question now is whether infrastructure, storage and transportation can keep pace with demand.
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