North America gas markets short-term outlook: Freeport LNG outage provides much needed storage relief

Despite just past the summer solstice, sweltering temperatures above or at near record triple digit highs threatened Henry Hub gas prices to cross into double digits as it increased its risk premia to price up to global gas prices. Perhaps running at prolonged high utilization rates under extreme heat was just too much, but a “water hammer” like event at Freeport LNG resulted in an explosion and complete outage on 8 June. With an expected near 250 bcf loss of US feedgas requirements, a much needed storage cushion will loosen North America gas markets. Along with it, the risk premia to price up to global gas prices has diminished, although we are not yet out of the woods with storage still expected lower than the five-year average prior to the start of winter 2022/23.