Henry Hub Jumps 16% in a Month but Oversupply and Hormuz Disconnect Cloud the Rally

Henry Hub Jumps 16% in a Month but Oversupply and Hormuz Disconnect Cloud the Rally US natural gas prices are rising on weather and LNG demand while storage sits 8% above last year, setting up a supply-demand tension. NYMEX Henry Hub front-month spot gas prices jumped 5.1% to $3.06/MMBtu in Tuesday's mid-day session. Gas prices have now climbed nearly 16% over the past month. June futures touched an eight-week high of $3.138 before reversing to settle at $3.004, down 11 cents or 3.53% on the day, FX Empire reported. That kind of intraday reversal from a session high carries weight for short-term directional positioning.⁴ The rally sits on contradictory foundations. Working gas in storage fell by 52 billion cubic feet for the week, well below the five-year average withdrawal of 168 Bcf. Inventories are now 141 Bcf higher than a year ago, about 8% above last year's level. The storage picture does not scream tightness. It screams comfortable surplus.^1,2 Yet production growth is running hot. EIA data show Lower 48 marketed natural gas production averaged 117.2 Bcf/d in the first quarter of 2026, a 4% increase over the same period in 2025. The agency forecasts L48 production will increase 3% this year, driven mainly by the Permian region, which is expected to produce 29.2 Bcf/d in 2026, up 6% from 2025. Haynesville production is forecast to grow 6% this year and 8% next year. The supply taps are open.³ The bull case rests on LNG exports. New liquefaction capacity at Golden Pass and Plaquemines is ramping, and the Hormuz closure has pushed global LNG buyers to compete for non-Qatari molecules. But the disconnect is visible in the price. Henry Hub closed last week at $2.67/MMBtu according to 247 Wall Street, a glut-level reading even with Qatar, the world's largest LNG exporter, still partially offline. US terminal utilisation is already near capacity, limiting the ability to absorb more domestic gas into the export stream.⁷ The ProShares Ultra Bloomberg Natural Gas ETF, BOIL, tells its own story. The fund is trading around $13, down 43% year to date and 80% over the past year. One trade publication reported it jumped 65% in a single week during the January cold snap, with NYMEX Henry Hub front-month contracts posting a 125% rise over four sessions. That kind of volatility makes the instrument a weather trade, not a structural position.⁷ Bloomberg reported that European gas inventories have shown a couple of days of withdrawals weeks before first draws are typically seen. If European storage begins tightening earlier than usual, the pull on global LNG cargoes could indirectly support NYMEX Henry Hub front-month through the Atlantic arbitrage. But the arb mechanism depends on TTF-Henry Hub spreads staying wide enough to cover shipping and regasification costs. At current levels, the spread is open. Whether it stays open through the summer injection season is the question.⁶ Forecasters are split on where NYMEX Henry Hub front-month goes from here. EIA expects the Henry Hub natural gas spot price to average just under $3.50/MMBtu this year. Morgan Stanley said prices could surge to $5/MMBtu. The gap between those two numbers reflects genuinely different assumptions about weather, export capacity ramps and Hormuz resolution timing.⁵ The EIA projects Permian constraints will ease later this year, with production in the region growing 10% next year. That supply wall, combined with inventories already sitting 8% above last year, makes a sustained move above $3.50 difficult unless weather cooperates or another LNG demand shock arrives.^3,1 The signal to watch is whether June futures can reclaim and hold above the 50% technical level at $3.107 that they failed to hold on Wednesday. A close above that level on rising volume would suggest the month-long rally has legs. A second rejection confirms the $2.67 to $3.14 range as a ceiling, and traders will need a fundamental catalyst to break out of it.⁴