What Is a Basis Spread?
A basis spread (or basis differential) is the price difference between the same commodity at two different locations. It measures the cost of moving energy from one hub to another — reflecting transportation, pipeline capacity, and regional supply/demand.
Key Basis Spreads in Energy Markets
| Spread | What It Measures | Typical Range |
|---|---|---|
| Waha-Henry Hub | Permian Basin pipeline bottleneck severity | -$10 to +$1/MMBtu |
| Brent-WTI | Atlantic Basin crude oil arbitrage window | -$3 to +$10/bbl |
| Brent-Dubai | East-West crude flow economics | $0 to +$8/bbl |
| TTF-Henry Hub | Atlantic LNG export incentive | $2 to +$30/MMBtu |
| Brent-Oman | Physical delivery premium signal | -$2 to +$5/bbl |
The Waha Paradox: When Gas Prices Go Negative
The Waha Hub in West Texas is the primary trading point for Permian Basin natural gas. In 2026 Waha stayed below zero for a record 90 consecutive trading days, ending in mid-June: producers paid buyers to take their gas. Why Waha gas prices go negative covers the mechanics and the history.
This happens because:
- Associated gas — Permian gas is a byproduct of oil drilling. Producers can't stop gas production without stopping lucrative oil production.
- Pipeline bottlenecks — Production (27.7 Bcf/d) overwhelms takeaway capacity to the Gulf Coast.
- No storage — Unlike oil, stranded gas has limited local storage options.
The Waha-Henry Hub basis spread quantifies this bottleneck. When it's deeply negative (-$7 to -$10), it signals severe infrastructure constraints. Matterhorn Express (October 2024), the Gulf Coast Express expansion and Hugh Brinson (both June 2026) each narrowed it; Blackcomb is expected in the fourth quarter of 2026.
Brent-WTI: The Global Crude Arbitrage
The Brent-WTI spread reflects the relative value of international vs domestic U.S. crude. When Brent trades at a premium to WTI, it incentivizes U.S. crude exports. When the spread narrows or inverts, domestic supply is tight.
Why Basis Spreads Matter
For midstream companies: Basis spreads determine whether pipelines are economically full. A wide Waha-HH basis justifies new pipeline investment.
For traders: Basis differentials create arbitrage opportunities. If you can move gas from Waha to Henry Hub cheaper than the basis spread, you profit.
For producers: Basis risk is the risk that the price at your production location diverges from the benchmark. Permian producers face massive basis risk on gas.
Basis at each US hub
- US natural gas hubs and basis
- What is Algonquin Citygate, and why does New England gas spike in winter? Algonquin Citygate prices gas delivered into New England. Why pipeline limits make it the most volatile US hub in cold weather, and what moves its basis to Henry Hub.
- What is Transco Zone 6 NY? Transco Zone 6 NY prices gas delivered into New York City on the Transco pipeline. Where the zone is, why it swings with weather, and how its basis to Henry Hub behaves.
- What is Tetco M3? Tetco M3 prices gas delivered in Texas Eastern's Market Zone 3, from eastern Pennsylvania to New Jersey and New York. Where it sits, what sets it, and how it relates to Henry Hub.
- What is Eastern Gas South, and why does Appalachian gas trade at a discount? Eastern Gas South, formerly Dominion South, prices Marcellus and Utica gas in southwest Pennsylvania. Why it usually trades below Henry Hub and what narrows the gap.
- What is Chicago Citygate? Chicago Citygate prices gas delivered to the Chicago-area utilities. The pipelines that meet there, why it tracks Henry Hub closely most of the year, and when it breaks away.
- What is the Houston Ship Channel gas hub? Houston Ship Channel prices gas delivered to the industrial and power load around Houston. Where it sits between Waha and the LNG terminals, and why two published indexes for it differ.
- What is SoCal Citygate? SoCal Citygate prices gas delivered into the SoCalGas system around Los Angeles. How pipeline outages, Aliso Canyon storage limits and the gap to SoCal Border have moved it.
- What are PG&E Citygate and Sumas? PG&E Citygate prices gas delivered into northern California; Sumas prices Canadian gas crossing into Washington. How the two West Coast hubs connect and why both can trade far above Henry Hub in cold snaps.
Get Basis Spread Data via API
curl -H "Authorization: Token YOUR_KEY" \ "https://api.oilpriceapi.com/v1/spreads/basis?pair=WAHA_HH" # All basis pairs at once curl -H "Authorization: Token YOUR_KEY" \ "https://api.oilpriceapi.com/v1/spreads/basis/all"
Returns spread value, component prices, signal classification (normal/widening/severe_bottleneck), negative streak days, and 1-year percentile. Full API docs.