Shale, pipelines and hubs: turmoil ahead for US gas hedging

Regional market correlations in flux amid structural change

The US natural gas markets are undergoing unprecedented change, with growth in shale gas continuing to outpace expectations in some regions and new pipeline capacity coming on at a rapid rate. As a result, regional prices are moving fast and correlations between markets are in flux, something that is affecting the functionality of certain hedging instruments and adding complexity to hedging decisions, say analysts. 

In the long term, the wide price spread between different US regional markets i