Why is the U.S. pure fuel value rising at this time?
That was the query Rigzone requested Ole R. Hvalbye, a commodities analyst at Skandinaviska Enskilda Banken AB (SEB), in an unique interview on Monday.
Responding to the query, Hvalbye highlighted to Rigzone that Henry Hub was buying and selling round $3.5 per million British thermal items (MMBtu) at this time, “up from [around] … $3.1 per MMBtu earlier than the weekend”, and famous that “the drivers look pretty simple and well-known relatively than structural”.
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“Brief-term forecasts turned colder throughout components of the U.S., lifting heating demand expectations and supporting front-end costs,” Hvalbye informed Rigzone.
“Feedgas flows stay elevated and agency, reinforcing near-term demand for U.S. fuel and tightening the spot stability marginally,” he added.
“After the current sell-off, the market was comparatively brief, so colder climate and regular LNG demand triggered short-covering relatively than contemporary lengthy positioning,” he continued.
Hvalbye went on to state that, “on the availability facet, there’s no disruption story”.
“U.S. manufacturing stays sturdy, storage remains to be comfy, and nothing suggests a sudden structural tightening from my information – i.e., a cause why the transfer seems tactical relatively than elementary,” he identified.
Hvalbye highlighted to Rigzone that at this time’s value improve “isn’t a clear breakout”, including that costs “are roughly again to the place they had been per week in the past, so a part of at this time’s transfer is solely retracing final week’s dip”.
“Briefly: climate plus LNG demand plus positioning clarify at this time’s energy. It’s a bounce, not a regime shift,” he added.
In a separate unique interview with Rigzone on Monday, Artwork Hogan, Chief Market Strategist at B. Riley Wealth, mentioned U.S. pure fuel “is bouncing off a 13-week low of $3.10 final week after the climate outlook for late January shifted colder”.
“The colder than regular outlook is predicted to drive sturdy heating demand and better energy era wants,” he added.
“The mix of rising home consumption expectations and alerts from grid operators underpins the worth beneficial properties,” Hogan informed Rigzone.
“Furthermore, the chilly snap might immediate further spot LNG purchases in Asia, supporting world pure fuel demand,” he continued.
When he was requested why the U.S. pure fuel value is rising at this time in one other unique interview with Rigzone on Monday, Phil Flynn, a senior market analyst on the PRICE Futures Group, mentioned, “it’s all in regards to the polar vortex”.
“This chilly caught some unexpectedly and it’s not solely this chilly blast, it’s how far south it’s going and the truth that it is likely to be extra sustained than initially thought,” he added.
“You’re seeing an enormous motion up within the entrance finish of the curve … The market is gapping increased and if this chilly stays round for a bit of bit, it might preserve these costs sturdy,” he continued.
In a J.P. Morgan analysis observe despatched to Rigzone by the JPM Commodities Analysis group early Monday, J.P. Morgan projected that the U.S. pure fuel Henry Hub value will common $3.85 per MMBtu within the first quarter of 2026, $3.74 per MMBtu general this yr, and $3.73 per MMBtu general in 2027.
Enverus projected, in its just lately launched 2026 power outlook report, that Henry Hub costs will common $3.80 per MMBtu “by way of the winter months” and $3.60 per MMBtu “through the summer time, earlier than regularly growing to $4.00-$4.50 per MMBtu by the tip of the last decade”.
In a BMI report despatched to Rigzone by the Fitch Group on Friday, BMI projected that the entrance month pure fuel Henry Hub value will are available at $3.90 per MMBtu this yr and $4.00 per MMBtu subsequent yr.
The U.S. Vitality Info Administration’s (EIA) newest brief time period power outlook (STEO), which was launched on January 13, forecast that the Henry Hub pure fuel spot value will common $3.46 per MMBtu in 2026 and $4.59 per MMBtu in 2027. This commodity averaged $3.53 per MMBtu in 2025, the STEO highlighted.
In its newest STEO, the EIA projected that the Henry Hub pure fuel spot value will are available at $3.38 per MMBtu within the first quarter of 2026, $2.75 per MMBtu within the second quarter, $3.42 per MMBtu within the third quarter, $4.28 per MMBtu within the fourth quarter, $4.78 per MMBtu within the first quarter of 2027, $4.30 within the second quarter, $4.43 per MMBtu within the third quarter, and $4.84 per MMBtu within the fourth quarter of subsequent yr.
To contact the creator, e-mail andreas.exarheas@rigzone.com
