* Pipeline constraints cause negative gas prices at Waha

Hub

* Permian gas output growth expected to slow in 2026 and

2027

* Higher oil prices may boost future Permian gas

production

By Scott DiSavino

NEW YORK, March 12 (Reuters) - U.S. spot natural gas

prices for Thursday at the Waha Hub in the

Permian Shale in West Texas closed in negative territory for a

record 25th straight day as pipeline constraints trap gas in the

nation's biggest oil-producing basin, prompting some analysts to

project that gas production could be reduced in the short term.

Longer-term, energy firms will likely boost Permian output when

more gas pipes enter service as soaring oil prices from the Iran

war encourage oil and associated gas production, and as gas

demand rises to feed fast-growing U.S. liquefied natural gas

(LNG) exports and to produce electricity for power-hungry data

centers running artificial intelligence (AI) technologies.

Analysts have long said negative prices, which force some

energy firms to pay others to take gas associated with their oil

production, were a sure sign that the Permian region, which

spans West Texas and eastern New Mexico, needs more gas pipes.

More pipes are on the way this year, but not soon enough to

handle all the gas currently coming out of the ground.

"Continued negative pricing in the Permian is expected for

much of the spring. As regional production likely ebbs lower, it

may dent national-level headline output in tandem in coming

weeks," analysts at consultancy EBW Analytics Group said in a

note.

Permian gas output has hit record highs every year since around

2013, according to U.S. Energy Information Administration (EIA)

data going back to 2009, reaching 27.7 billion cubic feet per

day (bcfd) in 2025 - enough to supply over a quarter of U.S.

demand. One billion cubic feet of gas is enough to supply about

five million U.S. homes for a day.

Gas production in the basin has climbed by around 12% a year

on average over the past five years (2021-2025), making the

Permian the fastest-growing and second-biggest gas-producing

shale basin in the country behind the Marcellus/Utica Shale in

Appalachia in Pennsylvania, Ohio and West Virginia.

But gas output growth in the Permian is expected to slow to

around 4% a year on average in 2026 and 2027, according to EIA's

latest estimates.

"Longer term ... higher oil prices encouraging more oil

production and future associated gas suggests a huge supply

tailwind as new Permian pipelines come online in the back half

of 2026," EBW said.

NEGATIVE PRICES

Energy firms in the Permian have been willing to take some

losses on gas because they can make up for those with profits

from selling oil. Negative gas prices were not very common a

decade ago when environmental rules were less strict and many

drillers could flare or burn off some of their unwanted gas.

But in recent years, that gas has become increasingly

valuable as a fuel to generate electricity used by power-hungry

U.S. data centers and for export via pipeline to Mexico and as

LNG to markets around the world.

In the U.S. cash market, average prices at the Waha Hub fell

to minus $6.34 per million British thermal units (mmBtu) for

Thursday, down from minus $5.40 for Wednesday and a record minus

$7.15 for Tuesday.

Daily Waha prices first averaged below zero in 2019. They

did so 17 times in 2019, six times in 2020, once in 2023, a

record 49 times in 2024, 39 times in 2025, and 34 times so far

this year.

Waha prices have averaged a negative 37 cents per mmBtu so

far in 2026, compared with $1.15 in 2025 and $2.88 over the past

five years (2021-2025).