Why did Henry Hub natural gas rise only 6.1% this month?
Henry Hub natural gas is 2.9, up 6.1% over the past 30 days. Every other number on my screen moved more, some of them a lot more, so the small move is the thing worth explaining. A fuel operator watching diesel go vertical wants to know why one benchmark stayed quiet.
Crude usually pulls gas along with it. WTI is 103.22, up 25.3% over 30 days. Brent is 108.3, up 22.3%. Those are supply-shock numbers, and the wire says why: Saudi Arabia shut its East-West pipeline after drone attacks, and vessel traffic through the Strait of Hormuz fell to single digits a day. That pipeline is how crude normally skips Hormuz, so closing it put Middle East barrels at risk of not showing up, and the market priced that in.
The oil-linked fuels followed crude, as you would expect. U.S. diesel is 5.967, up 13.5%. ULSD futures are 4.842, up 13.1%. Both printed record-high talk on the wire, with one report putting retail diesel at $6.23 a gallon and blaming the pipeline shutdown. The 3:2:1 crack spread is 55.24, down 11.48 over the month, which tells me crude rose faster than the products refiners make from it. Refiners are running hard into a squeeze, and the RBN piece on the wire says high cracks alone don't lift output when the constraint is elsewhere. A rough month for refining margins even with fuel this expensive.
So gas should have moved with all of that. It barely did. 6.1% against crude's 25.3% is a fraction of the move, and the reason is that natural gas in the U.S. is mostly a domestic market. The Saudi pipeline carries crude. Hormuz carries crude and LNG cargoes, but U.S. gas prices are set by U.S. production and U.S. storage, and neither of those is sitting in the Middle East. The supply fear that drove crude up a quarter has a much smaller door into Henry Hub.
Storage confirmed it. U.S. natural gas storage is 110.47, up 5.2% over 30 days, and 110.47 is the 30-day high. Inventory is building and is at its top of the month right now. Full and filling storage caps a gas price, because buyers who need molecules can pull from inventory instead of bidding up the spot. A market staring at a supply shock in oil looked at its own gas tanks and saw them full.
The number that surprised me was inside the 6.1% itself. Henry Hub's 30-day high is 3.343 and it is now 2.9. Gas ran up to 3.343 and came back down to 2.9. The 6.1% is a net figure for the month, and it hides a round trip: a spike, then most of it given back. So even the modest gain overstates how firm gas is today. The market tried a higher price and did not hold it.
Europe is the tell on why. One report has European gas prices jumping 6% on the same Saudi pipeline news. Europe imports its gas and prices it against global LNG, so a Middle East supply scare lands directly on European gas. The U.S. produces its own and exports the surplus. Same headline, two different exposures, and Henry Hub has the smaller one. The 6.1% here is closer to sympathy with the oil move than a signal that U.S. gas is short.
For fuel operators the read is fairly clean. If you run a refinery, natural gas is an input, for process heat and for the hydrogen that goes into hydrotreating diesel. A gas price up only 6.1% means that one input cost stayed close to contained while crude, your main input, rose 25.3%. Small comfort in a month when the crack fell 11.48, but real. Your gas line did not blow out the way your crude line did.
If you sell diesel at retail, gas is not your problem this month. The diesel retail-wholesale spread is 1.3, up 0.233 over 30 days, so street margins on diesel widened a little as pump prices chased wholesale up. The pressure on your customers is diesel at 5.967, and it is coming from crude, not from Henry Hub.
If you run gas directly, a CNG fleet, or you buy gas for heat as the season turns, your cost is up modestly and off its monthly peak. That is a manageable move, and the full storage number is the reason to expect it stays manageable near term, absent a cold snap or a pull from LNG export demand.
Where I land: the 6.1% is the market declining to price a gas shortage that isn't there. Crude got a genuine supply shock and gas got a full storage report and a domestic supply base, so gas took the sympathy bid, tried 3.343, and settled back to 2.9. I am confident the small move is about U.S. supply and storage insulating Henry Hub from the Middle East, and confident it read as spillover rather than a gas problem. What I can't call is the next month. Cold weather or stronger LNG export pull could lift it from here, and the storage cushion could draw down faster than it built. For now, gas is the calm corner of an otherwise loud board.
And that was just the data. See you tomorrow.