North America gas short-term outlook: Winter price risk premia start to erode fast and furious

Despite a brief cold front in mid-October, the start of winter looks to be delayed and mild — not only in the US but in Canada and Western Europe as well. Prompt Henry Hub gas prices that shot up to over $10/mmbtu intraday in late August have since crumbled to a low of $5.25/mmbtu. Stronger-than-expected refill in storage inventories is the main culprit behind the eroding the winter price risk premia. We look into the following key North America gas market fundamentals this month: • Further confidence in US gas production growth • Returning feedgas flows at Cove Point LNG with tankers lining up at Freeport LNG • Mexican exports’ failure to grow for the first time in 12 summers