Two rooms, one molecule
Henry Hub is still stuck under three dollars. The September contract averaged $2.74 after it became the prompt on July 30, settled $2.81 on August 19, and was trading near $2.77 on August 21. Europe's TTF hub is around $21. Asia's Japan-Korea Marker is about $21.60. Alberta's AECO price closed C$1.46 per gigajoule on August 13.
People keep talking about "the gas market" like it is one room. It is not.
Room one is North America. Permian, Haynesville, Montney, and Duvernay wells keep turning out more molecules than the continent can burn. Power plants are happy. Storage is fat. The U.S. benchmark cannot get out of the twos. AECO is in the ones in Canadian dollars. That is a producer problem and a consumer gift.
Room two is the seaborne market. The Iran conflict and shipping trouble in the Strait of Hormuz knocked a hole in the usual Middle East supply line. Europe started the summer already thin. Asia is bidding. TTF is up about 95 percent from $10.78 when the conflict started. JKM more than doubled from $10.63. That is why a cargo leaving the Gulf Coast or Kitimat is worth a fortune even while a wellhead in Alberta is not.
The bridge between those rooms is LNG. When Freeport is down, U.S. gas has nowhere to go, so it sits in salt caverns and the price sags. When Kitimat is running near nameplate, Western Canada finally has a door that does not go through the U.S. Midwest. That door is still smaller than the basin. That is why AECO has not ripped even though LNG Canada is real.
What the official forecast just did
The EIA's August Short-Term Energy Outlook cut the third-quarter Henry Hub call to $2.87 per MMBtu, 50 cents below July. The full-year number fell to $3.44 from $3.67, and it is down more than 20 percent from the $4.31 guess back in February, when Winter Storm Fern still had people thinking winter would stay expensive.
EIA now says prices stay under $3 into November, then average about $3.03 over the last five months of 2026. End-October working gas is forecast at 3,985 billion cubic feet. That would be a record heading into winter, 5 percent above the five-year average, and the highest pre-winter pile since 2016.
You do not need a model to read that. The agency looked at record production, Freeport maintenance, and a storage surplus that survived the hottest stretch of summer, then walked the price down.
Canada's place in the split
LNG Canada is no longer a rendering. First cargo left Kitimat at the end of June 2025. Train 2 started producing in November. By April the plant was around 87 percent utilization, nearly 1.6 billion cubic feet a day, according to East Daley. Energy Intelligence wrote on August 14 that a year in, the project is approaching full use and filling a hole the Middle East conflict opened.
That is the good news if you sit in Calgary or Fort St. John. The honest news is the basin is still oversupplied. Morningstar DBRS has AECO averaging about C$2.50 per Mcf this year. Associated gas from liquids-rich Montney and Duvernay keeps showing up whether AECO likes it or not. Canada can be an LNG country and still have a cheap domestic price. Those two facts are not a contradiction. They are a takeaway problem.
What to watch from here
Freeport's maintenance is supposed to wrap in late August. If it does, more U.S. gas reconnects with a world paying $21. Shoulder season is coming anyway. Once the air conditioners go quiet, the only bid left on this continent is storage and LNG. Storage is already ahead of the five-year. LNG is the swing.
Phase 2 at Kitimat is the Canadian version of that swing. Partners issued a limited notice to proceed in June. A final investment decision is still a late-2026 question. Until that plant is twice as big, or Woodfibre and Cedar start loading, Alberta remains the cheap seat.
The next 90 days decide whether $2.80 was the floor or just August.