New Pipelines Set to Ease Permian Natural Gas Glut

Natural gas prices are holding near multi month lows even as Permian pipelines set ease for the glut of gas that has plagued West Texas producers for most of this year. United States Natural Gas Fund (AMEX:UNG) traded at 9.99 dollars, down 0.2% on the day, sitting inside a 52 week range of 9.54 to 12.11 and carrying an RSI of 44.42, a reading that suggests the fund is neither overbought nor oversold as traders wait for the regional bottleneck to clear.

Why Waha Prices Fell Below Zero

The story behind UNG's sluggish trading starts hundreds of miles from any trading floor, in the oil fields of the Permian Basin. Gas produced alongside crude, known as associated gas, has been piling up faster than pipelines could carry it away. For much of the first half of 2026, the Waha hub, which prices gas from the Midland area, averaged negative 2.19 dollars per million British thermal units. At the end of April it sank to a record negative 7.95 dollars, more than 10 dollars below the national Henry Hub benchmark, which sat near 2.70 dollars at the time. Producers were left flaring gas or paying to dispose of it rather than sell it.

New Pipelines Start Turning the Tide

That math began to shift in June. Waha prices climbed back above zero and have stayed there for more than a month, largely because the expanded Gulf Coast Express Pipeline came online alongside Energy Transfer's new Hugh Brinson Pipeline. The Hugh Brinson line is moving gas already, though it won't hit full capacity until March 2027. East Daley Analytics described the route as designed to carry Permian and Midland Basin gas eastward from Waha toward East Texas, the Katy Hub, and Gulf Coast buyers, including LNG export terminals, power plants, storage sites, and industrial users. Aegis Hedging noted that producers who had curtailed output through shut ins or flaring have begun restoring those volumes now that fresh capacity exists.

How Much Capacity Is Actually Coming

The scale of construction underway is significant. Federal energy data compiled earlier this year shows pipeline developers plan to add 44.9 billion cubic feet per day of new gas pipeline capacity across the country in 2026 and 2027, with Texas accounting for more than 66%, or 29.7 billion cubic feet per day, of that total. Three projects stand out for finishing this year:

• Hugh Brinson Pipeline
• Rio Bravo Pipeline Project
• Blackcomb Pipeline

Each is expected to chip away at the takeaway bottleneck that has kept Permian gas prices depressed relative to the rest of the country.

Producers Still Wary Despite the Relief

Despite the progress, operators aren't declaring victory. A Dallas Fed Energy Survey from June found that executives at exploration and production companies still view natural gas takeaway capacity as the single biggest constraint on drilling activity in the Permian over the next year. Opinions varied widely on timing. A quarter of respondents pointed to the first quarter of 2027 as when constraints would fully ease, while more than 10% think relief won't arrive until 2028 or later, and about 7% said the bottleneck would never fully resolve. There's also a wildcard: if tensions tied to the Strait of Hormuz keep oil prices elevated, drillers may ramp up Permian activity again, pushing out even more associated gas and testing the new pipeline capacity almost as soon as it comes online.

Will the Permian Glut Fully Clear Before New Drilling Undoes It

The next several quarters will determine whether these pipeline additions genuinely rebalance the Permian gas market or simply buy time. Producers are cautiously optimistic, but the range of survey responses, spanning from early 2027 to never, shows how uncertain the timeline still feels on the ground. For now, Waha prices staying positive marks real progress, even if the broader gas market, reflected in UNG's still muted trading, hasn't fully priced in a lasting fix.

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