Since August, physical natural gas flows at Henry Hub have been at all-time highs for each respective month, and, in early October, they recorded the highest single-day flows that we’ve seen since December 2009. For decades, liquidity at the U.S. natural gas benchmark pricing location in southeastern Louisiana has been dominated by financial trades, with minimal physical exchange of gas, despite the hub boasting robust physical infrastructure and ample pipeline connectivity. That’s still the case, but physical movements of gas in the area have been on the rise due to LNG exports ramping up from the Sabine Pass and Cameron LNG facilities in southwestern Louisiana and a slew of Appalachia gas supply pipelines targeting that export demand. As more physical gas is moving through the hub, operational constraints are developing at key interconnects there. That, along with the ups and downs of LNG feedgas demand, is contributing to spot price volatility at the hub and, at times, a deeper divergence between Henry spot and futures prices. Today, we begin a short blog series on the changing gas flow dynamics in and around Henry.
Riders on the Storm – Henry Hub Physical Gas Volumes Jump with LNG Exports, Storage Flows
