Forecasts vs Futures: Why the Divergence?

While natural gas outlooks and futures may seem aligned in purpose—anticipating future price and supply-demand conditions—the panel emphasizes that their underlying assumptions and methods differ significantly.

“The divergence is more in the assumptions that you’re going to run through the model for what you expect to happen in the future.”

This divergence often arises even when using the same historical data. Outlooks are built on what analysts believe will happen under given scenarios, while futures reflect what traders think is likely based on current market signals. The hosts underscore that scenario modeling—rather than pinpoint prediction—is the real value of long-term forecasting.

Models that Matter: Inside RBAC’s Toolset

RBAC’s robust simulation systems play a crucial role in generating credible gas outlooks. These include:
– GPCM (Gas Pipeline Competition Model): North American gas flow simulation down to the pipeline level
– G2M2: The global gas outlook model, incorporating regional and geopolitical data
– NGL Model: For natural gas liquids (ethane, propane, butane)

“We have our own US or I guess I would say North American model, GPCM. We have a global gas model [G2M2]… We build all these in-house and we’re trying to simulate what’s happening in real life.”

Unlike broader corridor models, RBAC’s tools offer high granularity, including real-world infrastructure and policy constraints.

Geopolitics, Regulation & Data Challenges

The panel also highlights that geopolitical developments and regulatory hurdles often influence the outcomes of these models more than pure economics.

For example:
– The Nord Stream 2 explosion and subsequent re-routing of European gas flows
– Ongoing pipeline permitting constraints in New England and the northeast U.S.
– Rising tension over ethane export restrictions, which could reshape associated gas supply

Outside the U.S., data can be sparse or politically filtered. RBAC tackles this by building aggregated ‘Geopolitical Units’ for regions with limited visibility—such as West Africa or parts of Asia.

The AI & Data Center Boom: Gas Demand Reimagined

One of the most dynamic segments of the conversation centers on the explosive growth in AI and data centers, which could significantly reshape electricity—and thus natural gas—demand.

“It could be 2 BCF a day, it could be, I’ve seen numbers as high as 15, maybe even 20 BCF a day.”

The discussion compares this uncertain future to a hurricane forecast cone—we know more demand is coming, but not exactly how much or how fast. As with LNG, visibility improves with time and infrastructure development.

Forward Curves & Scenario Analysis

RBAC’s forecast diverges sharply from the CME’s futures curve in 2030 and beyond. While CME curves assume market equilibrium at ~$3.50/MMBtu in 2030, RBAC’s model suggests a higher price would be needed to support growing LNG and AI-related demand.

“The divergence really lies in how, at what price level do you get enough supply to meet that demand.”

Scenarios can be adjusted for factors like:
– Permian or Haynesville supply response
– Delays in turbine delivery or transmission upgrades
– Regulatory shifts or infrastructure bottlenecks

Adapting to an Uncertain Future

So what should analysts or decision-makers do in light of these divergences?

1. Focus on scenario planning over single-point forecasting
2. Calibrate elasticities—how supply responds to price
3. Monitor new infrastructure, policy signals, and demand trends
4. Understand the assumptions behind any curve—whether modeled or traded

“We’re just providing a model that allows you to modify, change, put in your own assumptions.”