September Pricing Analysis - North American Natural Gas

SUMMARY

September's defining feature was a split between Henry Hub and most regional cash markets. HH firmed, averaging $2.96/MMBtu (+6.7% MoM), while every regional point in the set traded at a discount throughout the month and four of the six widened. A short-lived Appalachian pipeline outage sharpened the split late in September, with HH setting its high on the same day Northeast basis reached its widest. The weakness was concentrated in the Northeast and at Waha, where the discount widened again after August's improvement. The Gulf held up best, with HSC and Katy the only hubs to narrow MoM. Into October, the key questions are whether Northeast discounts persist into the heating season and whether Waha resumes narrowing.

PRICE ACTION: Henry Hub firmed 6.7% MoM; Northeast, Waha and Chicago cash lagged

• HH averaged $2.955/MMBtu vs August's $2.769/MMBtu (+$0.186, +6.7% MoM). It opened at $2.870/MMBtu on 1 Sep and closed at $3.022/MMBtu on 30 Sep.
• The low came early: W2 averaged $2.820/MMBtu (−2.9% WoW) and printed the monthly low of $2.708/MMBtu on 11 Sep. Each of the next three weeks averaged higher, and W5 reached $3.122/MMBtu.
• The largest single-day move was +$0.268/MMBtu (+9.0%) to the monthly high of $3.235/MMBtu on 25 Sep, one day after the Mountaineer XPress force majeure. HH eased to $3.145/MMBtu on 28 Sep once the force majeure was lifted, but held above $3.00/MMBtu into the close.
• Intra-month range was $0.527/MMBtu vs August's $0.430/MMBtu.

PRICE VOLATILITY: Flat price stayed calm while basis volatility rose; Transco Z6 range doubled

• HH CV was 4.5% vs 3.9% in August, inside its six-month band of 3.8% to 9.2%. Volatility was concentrated in basis rather than flat price.
• HSC CV rose to 32.9% from 18.1%, and Chicago CV rose to 51.9% from 33.1%, driven by basis widening that began in W3 and extended through month-end.
• Transco Z6 range rose to $1.886/MMBtu from $0.911/MMBtu. Algonquin's range narrowed to $1.977/MMBtu from $2.537/MMBtu because August's +$1.433/MMBtu premium spike (5 Aug) did not recur, though September still swung between −$0.360 and −$2.337/MMBtu.
• Waha range doubled to $1.072/MMBtu from $0.552/MMBtu, while CV held near 22%.

SOMETHING TO WATCH

• Waha-HH as the Permian takeaway signal
  • Observation: Waha-HH discount widened $0.362 MoM, reversing part of August's improvement.
  • Why it matters: a widening Waha discount signals Permian takeaway constraints biting; a return toward August's level would signal capacity catching up with supply.
  • What to monitor: Permian pipeline in-service and maintenance notices, and weekly Waha-HH relative to August's −$0.766/MMBtu average and September's −$1.862/MMBtu extreme.
• Northeast basis into the heating season
  • Observation: Algonquin-HH and Transco Z6-HH averaged −$1.109 and −$1.346/MMBtu, at a discount on every session.
  • Why it matters: New England normally prices at a premium to HH in winter; a discount that persists into November would confirm regional length rather than outage-driven pressure.
  • What to monitor: the first Algonquin-HH premium print since 5 Aug as the seasonal turn, and Columbia Gas Transmission notices on the Mountaineer XPress segment.