Three-Dollar Henry Hub Is a Liquefaction Ceiling, Not a Storage Cushion

On the surface, the US gas market enters winter in comfortable shape. The Energy Information Administration's storage report released on 1 October put Lower 48 working gas at 3,415 Bcf for the week ending 25 September, 79 Bcf above the five-year average. The November futures contract settled at $3.03 per MMBtu on 30 September. Europe and Asia, meanwhile, are paying roughly eight times as much for their gas. It is tempting to read the gap as a sign that America has gas to spare.

Henry Hub is low because export capacity caps how much of the global shortage can reach US prices, not because the domestic balance is loose. The American Gas Association's weekly indicators, drawing on futures data, set out how far the markets have separated since the Middle East war began. Between the week ending 22 February and the week ending 27 September, the weekly average of Dutch TTF futures rose about 127 per cent, from $10.78 to $24.49 per MMBtu, and Asian JKM futures rose about 145 per cent, from $10.63 to $26.08.

Canada LNG Group, citing AGSI+ data, put EU underground storage at 70.6 per cent full on 25 September, 18.3 per cent below the five-year average. The physical link between those markets is liquefaction, and it was running close to full. When every available liquefaction train is already running, a higher price in Rotterdam or Tokyo cannot pull more molecules out of Louisiana. The spread simply widens, and the rent accrues to whoever holds the export capacity and the cargo.

The EIA's September Short-Term Energy Outlook forecasts 3,969 Bcf in storage on 31 October, 5 per cent above the five-year average and 1 per cent above October 2025. The regional detail in the EIA table, for stocks on 25 September, is the core of our concern. South Central is the only region below its five-year average, and within it, salt storage is 15.5 per cent below the average and 27.3 per cent below a year ago.

The national averages argue for a quiet winter, and the EIA's own price outlook agrees: the September STEO, as summarised by the AGA, expects Henry Hub to average $3.43 per MMBtu in 2026 and $3.28 in 2027. A market with a liquefaction ceiling and thin Gulf Coast salt behaves asymmetrically. For utilities and large consumers, that argues for paying more attention to winter-strip and daily-delivery hedges in South Central than the national storage number alone would suggest. Three-dollar gas is genuine, and for most of the country this winter it will probably hold.