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Tight Supply Fundamentals Behind Henry Hub Rally

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The 60% rally in the Henry Hub front month price since late April has been driven by tighter supply fundamentals from lower production, rising gas-fired power generation and indications of more cooling demand this summer, according to IEA analyst Greg Molnar.

  • Overall US gas production fell by 1% yoy since March as Appalachia gas suppliers reduced their output when Henry Hub fell below $2/mmbtu.
  • Surplus gas has found an outlet from rising gas-fired power generation up by 6% yoy since the start of the year.
  • Mexico’s higher gas-fired power generation and domestic production decline are supporting stronger exports to Mexico up by 10% yoy since the start of the year.
  • Freeport LNG has returned to full operation of all three liquefaction trains after several months of maintenance and outages.
    • US Natgas JUN 24 up 4.4% at 2.74$/mmbtu
    • US Natgas NOV 24 up 1.5% at 3.2$/mmbtu
    • US Natgas MAY 25 up 0.9% at 3.12$/mmbtu
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The 60% rally in the Henry Hub front month price since late April has been driven by tighter supply fundamentals from lower production, rising gas-fired power generation and indications of more cooling demand this summer, according to IEA analyst Greg Molnar.

  • Overall US gas production fell by 1% yoy since March as Appalachia gas suppliers reduced their output when Henry Hub fell below $2/mmbtu.
  • Surplus gas has found an outlet from rising gas-fired power generation up by 6% yoy since the start of the year.
  • Mexico’s higher gas-fired power generation and domestic production decline are supporting stronger exports to Mexico up by 10% yoy since the start of the year.
  • Freeport LNG has returned to full operation of all three liquefaction trains after several months of maintenance and outages.
    • US Natgas JUN 24 up 4.4% at 2.74$/mmbtu
    • US Natgas NOV 24 up 1.5% at 3.2$/mmbtu
    • US Natgas MAY 25 up 0.9% at 3.12$/mmbtu