Henry Hub

Henry Hub is a critical natural gas distribution hub located in Erath, Louisiana. It serves as the official delivery location for futures contracts on both the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE). Owned and operated by Sabine Pipe Line LLC, a subsidiary of EnLink Midstream (NYSE: ENLC). Henry Hub is named after the Henry hamlet in Vermilion Parish, Louisiana, where it is located. The name "Henry" comes from the community's location, and the hub itself serves as a key distribution point for natural gas in the United States. .
== Overview ==
Henry Hub interconnects with nine interstate and four intrastate pipelines, making it a significant distribution center for natural gas across the United States. Its strategic location and extensive network allow it to facilitate the transfer of gas between different regions, thereby playing a pivotal role in the North American natural gas market.
=== NYMEX Henry Hub Natural Gas Futures ===
The Henry Hub natural gas futures contract on the NYMEX is one of the most liquid commodity futures contracts globally. Key features include:
* Contract Size: Each futures contract represents 10,000 million British thermal units (MMBtu) of natural gas.
* Trading Volume: Approximately 400,000 contracts are traded daily.
* Open Interest: The contract maintains about 1.7 million in open interest.
* Global Benchmark: It is one of the top three largest physical commodities futures contracts in the world, with growing use in South America, Asia, and Europe.
* Physical Settlement: NYMEX natural gas futures are closely connected to the spot market, allowing for physical delivery.
The CME Group, which operates NYMEX, also offers related products such as options on Henry Hub natural gas futures and micro-sized Henry Hub natural gas futures and options.
=== ICE Henry Hub Natural Gas Futures ===
The Intercontinental Exchange (ICE) also trades Henry Hub natural gas contracts, offering several related products, including:
* Henry LD1 Fixed Price Futures: A monthly cash-settled contract based on the monthly price published by NYMEX for the specified location.
* Henry Basis Futures: A monthly cash-settled contract based on the mathematical result of subtracting the NYMEX Henry Hub Natural Gas Futures price from the monthly price published by Inside FERC for the specified location.
ICE's Henry Hub futures market has seen record liquidity and open interest in 2024. ICE offers markets to manage long-term exposure to U.S. natural gas prices, extending out to October 2033.
=== Market Influence ===
The Henry Hub spot and futures prices are widely used as references in the natural gas industry. The U.S. Energy Information Administration (EIA) regularly reports on Henry Hub prices in its Natural Gas Weekly Update. These prices are influenced by various factors, including:
* Supply and Demand Dynamics
* Weather Conditions
* Economic Indicators
* Storage Levels
* Geopolitical Events
=== Global Impact ===
The importance of Henry Hub extends beyond the United States, as its pricing often influences global liquefied natural gas (LNG) markets. As the U.S. has become a major LNG exporter, Henry Hub prices have become increasingly relevant for international gas markets.
== References ==