Reconnected

Henry Hub gas prices have meteorically risen to its highest levels since 2008 piercing through $8/mmbtu, a more than doubling since its January contract expiry. Price volatility has increased very early into the summer injection season with market fears on the adequacy of storage refill prior to the upcoming winter. North America is not running out of low cost gas supply. However, its ability to correct market imbalances in the short-term has been seriously impaired due to a more muted production response and seemingly disappearing elasticity of economic gas-to-coal displacement at higher prices. Without a significant supply and demand response, Henry Hub gas prices are searching for a new ceiling to help balance markets. It has reconnected to its correlation with even higher global gas prices to prepare for the risk of the need to push back LNG export volumes back into the domestic grid as its last resort.