U.S. Henry Hub prices have climbed to a record high, Rystad Energy analyst Lu Ming Pang highlighted in a market note sent to Rigzone on Wednesday.
The commodity almost hit the $10 per MMbtu mark for the first time, Pang outlined, adding that Henry Hub has typically averaged about $2 to $4 per MMbtu in previous summers.
“Prolonged abnormal weather and a high demand for LNG internationally has applied upwards pressure on prices,” Pang said in the note.
“Mild weather in the past week has reduced gas-for-power demand for cooling, resulting in 5.4 billion cubic feet per day (Bcfd) taken off gas demand. Given that domestic natural gas production has decreased by only 1.1 Bcfd, it appears that Henry Hub prices are responding to the reverberations in Europe, as compared to domestic fundamentals,” Pang added.
In the note, Pang highlighted that U.S. storage levels were at 2.519 trillion cubic feet full as of August 17, which he said is 367 billion cubic feet (Bcf) below the five-year average, and 296 Bcf below last year’s levels for the same period, “adding further pressure on refilling U.S. storages, which may keep Henry Hub prices high”.
At the time of writing, the Henry Hub price was trading at $9.39 per MMbtu. Henry Hub was trading under $4 per MMbtu at the start of the year.
In a separate market note sent to Rigzone last week, Pang said the heatwave across the U.S. in July had led to record Henry Hub prices of beyond $9.46 per MMBtu.
According to scientists from the U.S. National Oceanic and Atmospheric Association’s National Centers for Environmental Information, July 2022 will go down in the history books as the third-hottest July on record for the United States.
The average temperature across the contiguous U.S. last month was 76.4 degrees F (2.8 degrees above average), NOAA highlighted. July 1936 was the hottest on record and July 2012 was the second hottest, NOAA outlined.
According to NOAA, Texas felt the brunt of the heat this year, “reporting its hottest July, May-July and April-July on record”.
