The tanker LNG GENEVA, which departs from the Port of Cameron, USA, unloads US liquefied natural gas at the Revithoussa terminal near Athens, in Megara, Greece, on November 7, 2025. Greece emerges as a major regional hub for US LNG as the EU plans to phase out Russian LNG flows by 2027. (Photo by Nicolas Koutsokostas/NurPhoto via Getty Images)
NurPhoto via Getty Images
As oil prices struggle to find a footing in the wake of the latest OPEC moves, natural gas has stepped into a standout role in the global energy mix. This year, the demand and price trends for natural gas underscore both its resilience and its growing importance as an economic driver and transition fuel.
Why Natural Gas Is Defying the Energy Downturn
Global energy markets have been anything but stable in recent years. Geopolitical tensions, inflationary pressures, and the accelerating push toward decarbonization have made investors uneasy. Yet natural gas has defied much of that turbulence. In the United States, dry-gas production is forecast to reach around 118 billion cubic feet per day in 2026, up from the 107 billion or so recorded in 2025.
At the same time, consumption is set to climb: the U.S. Energy Information Administration (EIA) projects U.S. natural-gas demand will rise to about 91.4 Bcf/d this year—a record level. Meanwhile, liquefied natural gas (LNG) export capacity is improving, further underpinning the supply-demand dynamics.
These combined elements—strong production, export growth, and global demand—position natural gas as a stabilizing force in the energy sector even when the overall energy landscape is volatile.
Pricing Trends Point to Renewed Strength
Natural gas prices have rebounded sharply from 2024 lows. The EIA forecasts a full-year 2025 average of about $3.80/MMBtu, sharply higher than the sub-$3.00 levels of the previous two years. The EIA projects a further rise to around $4.20/MMBtu in 2026—driven by tighter supply-demand balances and expanding LNG exports.
By contrast, oil has faced headwinds from prolonged OPEC+ production and weaker demand in some regions. Natural gas, for once, is benefiting from structural tailwinds: as a fuel for heating, industrial processes, and power generation (especially with surging AI data center demand), it has multiple use cases—especially when renewables cannot yet fully cover demand or when intermittent supply needs backup.
The Bridge Fuel Becomes a Foundation
Beyond the immediate numbers, natural gas is playing a strategic role in the broader energy transition. It is the cleanest major fossil fuel, producing roughly half as much CO₂ as coal when combusted for the same power output.
Its flexibility makes it an ideal partner for renewables: gas-fired plants can ramp up and down to balance solar and wind intermittency. In many regions, gas infrastructure is now being paired with low-carbon technologies such as hydrogen blending and carbon capture, helping extend its relevance in a low-carbon world.
Just as important, gas-fired plants offer the flexible backup power needed to stabilize electric grids increasingly reliant on intermittent solar and wind energy. Around the world, new gas infrastructure is being built with future adaptability in mind—incorporating carbon capture, hydrogen blending, and other low-carbon technologies that will help extend its relevance well into the transition era.
As Wood Mackenzie put it, natural gas remains “the crucial bridge” to a lower-carbon future—even as electrification accelerates.
Emerging Demand from Data and Exports
New demand drivers are also emerging. The growth of AI and hyperscale data centers is creating fresh, consistent energy demand. To ensure uptime and lower emissions, many large operators are deploying on-site natural gas turbines instead of diesel generators. East Daley Analytics estimates this could add as much as 6 Bcf/d of new gas demand by 2030.
Meanwhile, global LNG trade continues to expand. Europe’s shift away from Russian pipeline gas and Asia’s continued industrial growth are reinforcing America’s position as the world’s leading LNG exporter. Together, these forces are turning natural gas from a transitional fuel into a foundation of both the digital economy and global commerce.
Risks Remain—but Fundamentals Hold
Natural gas is not without challenges. Prices remain sensitive to weather-driven demand swings and geopolitical shocks. Policy uncertainty—especially around carbon pricing and methane regulations—could raise costs and affect competitiveness. Infrastructure delays also remain a risk, as new pipelines and liquefaction projects depend on timely permitting and capital commitments.
Even so, the fundamentals remain solid. As renewable deployment struggles to keep pace with targets and oil faces cyclical weakness, natural gas offers a rare combination of reliability, affordability, and growth potential.
Investor Takeaways
For investors, natural gas presents several compelling opportunities:
- Upstream: Major natural gas producers and LNG exporters stand to benefit most directly from rising global demand.
- Midstream Infrastructure: Pipeline and storage operators are poised for higher throughput and stronger cash flows as export volumes grow.
- Integrated Transition Strategies: Firms investing in carbon capture and hydrogen blending alongside gas assets could enjoy lasting resilience through the transition.
While volatility is part of the package, natural gas remains a cornerstone for portfolios seeking exposure to both current cash flow and long-term transition themes.
Bottom Line
In a world striving for net-zero carbon emissions, natural gas is proving indispensable. It powers homes, industries, and data centers; it connects continents through LNG trade; and it bridges the gap between fossil fuels and renewables.
As oil falters and clean energy faces growing pains, natural gas is emerging as the bright spot—an energy source that is both pragmatic and profitable.