Henry Hub is the pricing benchmark for US natural gas, representing the delivery point for NYMEX natural gas futures contracts in Louisiana. Natural gas prices are more regional than oil — gas is difficult to transport internationally without expensive liquefaction infrastructure, so US prices can diverge significantly from European or Asian LNG prices depending on local supply-demand conditions. The US market is fundamentally driven by the balance between prolific shale gas production — particularly from the Marcellus and Haynesville plays — and demand from power generation, industrial users and residential heating. Weather is the most important short-term variable: extreme cold or heat drives power demand for heating and cooling that can move storage inventory levels significantly within weeks. LNG export capacity has become an increasingly important demand driver, linking US Henry Hub prices to global gas markets in a way that did not exist a decade ago. Storage levels relative to the five-year seasonal average are the key indicator of near-term price direction. For investors in utilities, industrial companies and LNG producers, natural gas price is a critical cost or revenue variable, and understanding seasonal storage dynamics is essential to anticipating price movements.
