Japan’s JERA is in talks to buy natural gas production worth USD $1.7 billion. This deal is a partnership between GeoSouthern Energy and Williams Companies. JERA’s move shows a strong long-term interest in U.S. natural gas. It highlights that big global buyers want to secure their supplies directly instead of relying on unstable spot markets. We believe this represents a lasting change that will help maintain U.S. natural gas prices for many years.

Focus on Henry Hub Futures

Traders should closely watch the later months of the Henry Hub futures curve. This agreement is not aimed at short-term prices, but instead secures demand for 2026 and beyond. This indicates that long-term contracts are likely undervalued. We expect increased buying activity for futures contracts set for delivery from late 2026 to 2028. We remember the sharp price increases of 2022 when the gap between U.S. Henry Hub prices and the Asian JKM benchmark reached new heights, with JKM sometimes over $40/MMBtu higher. This deal bets that U.S. gas will continue to be cheaper, making trades on a persistently high JKM-Henry Hub spread appealing. Recent data reveals that the gap has already expanded to over $9/MMBtu this month due to early winter demand forecasts in Asia. The security of such a large, long-term investment may also reduce volatility in longer-dated options. We could see a gradual drop in implied volatility for contracts that expire in 2027, making it less expensive to take bullish positions with call options. This follows a time of high volatility, where the OVX, the natural gas volatility index, reached a six-month peak just last quarter.

Impact on Export Utilization

This development aligns with the latest EIA report, which shows that U.S. LNG export facility usage climbed to 94% last week, the highest since spring 2024. With export capacity nearing its limits, this new demand stream reinforces a strong base for prices. We see this as a sign that any significant drop in natural gas prices will attract robust buying. This news should also highlight the stocks and options of the companies involved, especially Williams Companies (WMB). Traders should expect increased trading activity and positive sentiment for infrastructure firms that manage the pipelines and facilities linking U.S. gas fields to the global market. The worth of that infrastructure is clearly supported by this billion-dollar deal. Create your live VT Markets account and start trading now.

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