Henry Hub

Henry Hub is one of the most essential distribution hubs of natural gas situated in the US (Erath, Louisiana). The hub was named after the Henry hamlet located nearby. This pipeline is connected to thirteen other pipelines of the natural gas pipeline system of the US. Henry Hub was put into operation in the middle of the 20th century. Now it belongs to Sabine Pipe Line LLC.

Henry Hub significance

Henry Hub is a delivery point of natural gas for future contracts transacted on the New York Mercantile Exchange (NYMEX), which is a part of the world’s biggest marketplace of derivatives. At the same time, Henry Hub is a pricing point that sets the price for natural gas in North America and some other markets. The Henry Hub settlement prices give a price tendency on the market for such a unique commodity as natural gas. It’s traded in the US dollars per mmbtu, or heat units.

Comparison with other gas hubs

In comparison to the US, the hub pricing point in Europe and Asia is dispersed among several national hubs. For this reason, the natural gas price is highly correlated with the crude oil price. That makes the gas prices on the European and Asian markets less stable than on the US platforms.

An attempt to create a united European hub pricing point has been made. But it didn't lead to any results. Singapore might be considered for this role on the Asian market. However, now the gas prices in Asia are connected either to crude oil or Henry Hub.

Natural liquid gas delivery

Henry Hub also plays an important role in delivering liquid natural gas worldwide. Some of the main suppliers of this commodity as Australia or Qatar prefer to settle its price through the spot and futures markets instead of connecting it to the crude oil price. Therefore, they choose Henry Hub as the liquid gas pricing point, which proves its liquidity, sustainability, and great volume of exchanges. Moreover, the Henry Hub data on gas prices is generally accessible.