Gas trading on Henry Hub surged by 30% in 2024

Henry bounce: gas trading on Henry Hub surged by near 30% in 2024 to hit a record breaking 50 000 bcm (12 times the global gas demand). three key factors contributed to this extremely strong growth:

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(1) Lower margin calls: the steep decline in Henry Hub prices naturally translated to lower margin rates, which reduced the cost associated with holding positions and hence encouraged higher trade volumes;

(2) Higher gas burn for power: gas-fired powgen rose by 5% in 2024, reaching an all-time high 120 TWh. the volatility of gas-to-power demand is further exacerbated by the rapid expansion
of variable renewables, which is incentivising short-term gas trading;

(3) Henry goes global: global portfolio players actively hedging outside of their region of physical delivery, with around 25% of the trades on Henry are now originating from outside the US;

+(1) Algo trading: AI-based technologies likely provided an additional boost to gas trading;

The strong growth in traded volumes further improved Henry’s liquidity, with the hub’s churn rate now averaging at over 55 (a hub is considered liquid if its churn
is over 10).

Source: Greg Molnar

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