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USA Henry Hub Gas Prices Climb to Record High
U.S. Henry Hub prices have climbed to a record high, Rystad Energy analyst Lu Ming Pang highlighted in a market note sent to Rigzone on Wednesday.
The commodity almost hit the $10 per MMbtu mark for the first time, Pang outlined, adding that Henry Hub has typically averaged about $2 to $4 per MMbtu in previous summers.
“Prolonged abnormal weather and a high demand for LNG internationally has applied upwards pressure on prices,” Pang said in the note.
“Mild weather in the past week has reduced gas-for-power demand for cooling, resulting in 5.4 billion cubic feet per day (Bcfd) taken off gas demand. Given that domestic natural gas production has decreased by only 1.1 Bcfd, it appears that Henry Hub prices are responding to the reverberations in Europe, as compared to domestic fundamentals,” Pang added.
In the note, Pang highlighted that U.S. storage levels were at 2.519 trillion cubic feet full as of August 17, which he said is 367 billion cubic feet (Bcf) below the five-year average, and 296 Bcf below last year’s levels for the same period, “adding further pressure on refilling U.S. storages, which may keep Henry Hub prices high”.
At the time of writing, the Henry Hub price was trading at $9.39 per MMbtu. Henry Hub was trading under $4 per MMbtu at the start of the year.
In a separate market note sent to Rigzone last week, Pang said the heatwave across the U.S. in July had led to record Henry Hub prices of beyond $9.46 per MMBtu.
According to scientists from the U.S. National Oceanic and Atmospheric Association’s National Centers for Environmental Information, July 2022 will go down in the history books as the third-hottest July on record for the United States.
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Peak Oil Might Be Just Three Years Away, McKinsey Says
McKinsey’s Global Energy Perspective research was launched at a time when global energy markets are facing an unprecedented array of uncertainties, including the conflict in Ukraine. Nonetheless, the long-term transition to low-carbon energy systems continues to see strong momentum and, in several respects, acceleration.
Leading up to COP26, a total of 64 countries, covering more than 89 percent of global emissions, have pledged or legislated to achieve net-zero in the coming decades.
To keep up with these net-zero ambitions, the global energy system may need to significantly accelerate its transformation. The report projects a rapid shift in the global energy mix, with the share of renewables in global power generation expected to double in the next 15 years while total fossil fuel demand is projected to peak before 2030, depending on the scenario.
However, even with current government commitments and forecasted technology trends, global warming is projected to exceed 1.7 degrees Celsius by 2100, and reaching a 1.5 degrees Celsius pathway is increasingly challenging.
“In the past few years, we have certainly seen the energy transition pick up the pace. Every year we’ve published this report, peak oil demand has moved closer. Under our middle scenario assumptions, oil demand could even peak in the next three to five years, primarily driven by electric-vehicle adoption,” Christer Tryggestad, a Senior Partner at McKinsey, said
“However, even if all countries with net-zero commitments deliver on their aspirations, global warming is still expected to reach 1.7°C. To keep the 1.5°C pathway in sight, even more ambitious acceleration is needed,” Tryggestad added.
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