Natural gas prices in the U.S. were under pressure for many years, long before the COVID crisis gripped the world and threw energy markets into flux. Shale gas production, from both crude- and gas-focused basins, has driven U.S. output to incredible levels over the last 10 years. That growth has led to persistently low U.S. gas prices across the Lower 48, with the benchmark Henry Hub being no exception. The upshot of low gas prices has been steadily increasing demand, both in the domestic market and for exports of liquefied natural gas (LNG) to various markets around the globe. Until recently, those international markets had often been viewed as an insatiable demand sink, but reality has set in over the past year. Prices in Europe, one of the most popular destinations for U.S. LNG, have crashed below Henry Hub, and are threatening the once-steady flow of LNG. Market participants in the U.S. and Europe now find themselves poring over the fundamental details of both markets to determine how long the price weakness will last, or if it will only get worse from here. Today, we look at the increasingly interconnected gas markets on both sides of the Atlantic.
The Space Between – European and U.S. Gas Markets Look To Each Other For Price Direction
