Henry Hub front-month prices rose by over $1/mmbtu in almost one month across November, reflecting increased demand as colder weather hits the US, and domestic production declines. 

Domestic dry gas production averaged 102.4 bcf/d in November 2024, down from 104.7 bcf/d in the same period a year earlier, according to the U.S. Energy Information Administration (EIA). 

This reduced rate of production comes in response to storage inventories overhanging from last year’s mild winter, leaving 3.9 Tcf in underground storage onNovember 22. 2024, 5% higher than the 10 year average. This excess from the previous winter dulled prices in early 2024 and dampened volatility in the latter half of the year, providing a buffer to brief periods in summer months of strong domestic gas burn.

More recently, prices have been dragged upward by forecasts signalling a much colder winter relative to recent years, with December contract prices reaching $0.5/mmbtu higher than forward prices from the start of the rally. The supply side risk of reduced production coupling with this increased winter demand tells a similar story to the recent rally in European TTF prices, where uncertainty around the loss of piped volumes through Ukraine has driven upside risk. 

With new additional feed gas demand from Plaquemines and Corpus Christi LNG export terminals ramping up to begin commissioning in late December, upside risk is now firmly in the mind of market participants. A tightening U.S. domestic market could become an increasingly important driver of global prices as demand from LNG feed gas increases and as the country becomes more dependent on gas-fired generation.

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