Two important spot prices for natural gas are the Henry Hub in the United States and the National Balancing Point (NBP) in the United Kingdom. The difference between NBP and Henry Hub spot prices has increased significantly since early 2010. Relative prices in these two locations can be important to spot suppliers of liquefied natural gas (LNG) who are able to select cargo delivery destinations in order to maximize returns.
Reasons for the change in relative prices include: increasing production and expanding natural gas storage volumes in the United States (driven by shale gas developments), a stronger price linkage in Europe between rising crude oil and natural gas, high European demand which reduced European natural gas storage inventories this winter, and supply uncertainty associated with the diversion of LNG cargoes from Europe to Japan to help offset the loss of nuclear power generating capacity following the earthquake and tsunami. Japan is the world's leading consumer of LNG.