Pricewatch | 28 Jan 2022 | Gas Matters Today

US gas benchmark Henry Hub soared to its highest intraday price since late 2008 during Thursday’s session, with the rally prompted by a short squeeze.

The February-dated Henry Hub contract hit an intraday high of USD 7.40/MMBtu, with the rally coming late in the day. The front-month contract ended the day at USD 6.27/MMBtu – up 46.5% compared to Wednesday’s close.

The rally was prompted by a short squeeze, one trade source told Gas Matters Today, with the source highlighting that the February contract expired on Thursday.

In the coming days fundamentals could move Henry Hub higher as a blast of cold weather is due to hit the US north-east. Gas production in the US remains below the highs of ~97 Bcf/d seen in late 2021, as production in Texas is still recovering after well freeze-offs last week.

While production remains at ~95 Bcf/d, LNG exports from the US are at near record levels. Feedgas flows to US LNG plants stood at ~12.7 Bcf/d on Thursday, according to data compiled by RonH Energy.

Gas storage levels in the US have also tightened as recent cold weather, lower production and strong demand from US LNG plants have resulted in strong draws on storage.

The US Energy Information Administration (EIA) reported on Thursday that 219 Bcf of gas was withdrawn from storage sites last week, marking the largest draw on storage this winter. US gas storage levels now stand at ~2.5 Tcf, below the five-year average of 2.6 Tcf.

Across the pond, European gas prices ticked higher, with an unplanned outage at the Troll field in Norway providing support.

The February-dated NBP and TTF contracts closed 0.4% and 0.5% higher respectively on Thursday, with the Dutch marker closing at the equivalent of USD 30.52/MMBtu – USD 0.79/MMBtu higher than the UK gas benchmark.

The strengthening gas prices helped lift the European carbon price, which closed 1.2% higher at EUR 89.39/tonne.

Asian LNG marker dipped on Wednesday, closing 2.1% lower at USD 25.28/MMBtu.

Oil prices eased on Thursday after the US Federal Reserve announced that it will likely hike interest rates in March.

Brent and WTI closed 0.7% and 0.8% lower respectively on Thursday. Brent settled at USD 89.34/barrel. WTI closed at USD 86.61/barrel.

Front-month futures and indexes at last close with day-on-day changes (click to enlarge):

Time references based on London GMT. Brent, WTI, NBP, TTF and EU CO2 data from ICE. Henry Hub, JKM and API2 data from CME. Prices in USD/MMBtu based on exchange rates at last market close. All monetary values rounded to nearest whole cent/penny. Text and graphic copyright © Gas Strategies, all rights.