April Recap - North American Natural Gas

Henry Hub Next Day averaged $2.783/MMBTU in April, down 8.8% MoM and 18.2% YoY, as persistent oversupply - driven by strong production and weak shoulder-season demand-pressured prices. The steady three-week decline points to gradual rebalancing rather than a shock-driven move, with prices stabilizing near $2.70/MMBTU after a $2.546/MMBTU low as the market searched for a clearing level. Waha basis averaged -$8.629/MMBTU, underscoring Permian takeaway constraints where production outpaced pipeline capacity. While benchmark volatility has normalized, regional dislocations highlight ongoing infrastructure limits, leaving further price direction dependent on whether demand strengthens enough to absorb surplus at current levels or prices move lower to force rebalancing.

Market Activity

• Market activity was consistent with a system adjusting to surplus conditions rather than one responding to new information shocks.
• Trading flows appeared balanced, reflecting ongoing clearing rather than directional repositioning.
• Activity was concentrated in short-term balancing and routine risk management.
• Liquidity conditions remained stable, supporting continuous price adjustment without disruption.

Price Action

• Henry Hub Next Day opened at $2.942/MMBTU and closed at $2.639/MMBTU.
• Monthly average $2.783/MMBTU vs March $3.052/MMBTU (-$0.27, -8.8% MoM; -18.2% YoY).
  
  • Decline driven by supply surplus during shoulder season with no weather support.
• High: $3.086/MMBTU (Apr 6); Low: $2.546/MMBTU(Apr 24); range: $0.540/MMBTU.

‍Cross-Market Dynamics

• Price behaviour reflects supply-side conditions rather than demand-driven fluctuations.
• Absence of weather-related demand and limited marginal consumption constrained price support.
• Lower prices did not induce sufficient incremental demand to rebalance the market.
• Inter-commodity linkages remained weak, limiting cross-market adjustment mechanism.

Cross-Regional Dynamics

• Waha basis averaged -$8.629/MMBTU versus Henry Hub, widening from March.
• Persistent negative pricing reflects binding transportation constraints in the Permian Basin.
• Local supply exceeds export capacity, leading to regional price discounting.
• Convergence of other hubs toward Henry Hub indicates that the imbalance is region-specific rather than system-wide.

Curve Structure

• Market structure reflects persistent prompt weakness driven by oversupply.
• Likely shallow contango or flattening as market searches for demand clearing level.
  
  • Front-end softness dominates structure.
• No evidence of tightening across the forward curve.

Price Volatility

• April CV: 4.76% vs March 4.32% → volatility stable and normalized.
• Benchmark volatility no longer a primary risk factor.
  
  • January spike (118%) fully unwound.
• Basis volatility dominates risk profile.
  
  • Waha intra-month range: $10.375/MMBTU.

Something to Watch

• Henry Hub vs$2.546/MMBTU April low: tests whether current prices are sufficient to clear surplus supply; monitor sustained breaks below vs stabilization above.
• Waha basis: reflects severity of Permian takeaway constraints; wider basis signals increasing localized oversupply; track basis direction alongside pipeline utilization.
• Permian pipeline capacity: determines ability to move excess supply into the broader market; monitor new capacity additions and system utilization rates.
• Storage injections and early-season demand: indicate pace of rebalancing; deviations from seasonal norms show whether surplus is absorbed through demand or accumulating in storage.

Note: All figures, prices and market activity referenced in this report are based on the period 1–30 April 2026.