Natural gas futures have continued their upward momentum again this week! Henry Hub natural gas futures for June are trading at US$2.97/MMBtu as of 1:15pm EDT Thursday afternoon. Prompt-month closed at US$2.969/MMBtu yesterday, up $0.031/MMBtu from a week earlier and up $1.249/MMBtu from last year, while prices for the remainder of the injection season (end of October) pushed above US$3/MMBtu. Production declined, due to temporary maintenance, and liquified natural gas (LNG) exports continue to remain strong due to European and Asian demand for US supply. The EIA released its May Short-Term Energy Outlook, in which it reports US LNG exports set a record in March 2021 at 10.5 Bcf/d and averaged 9.2 Bcf/d in April. This is the most exported LNG for those months since the US began exporting it in 2016. The EIA estimates LNG exports will average 9.2 Bcf/d in both 2021 and 2022, up from 6.5 Bcf/d in 2020.
The EIA estimated working gas storage was 2,029 Bcf for the week ending May 7th, following an injection of 71 Bcf. Storage levels are now 15.7% below year-ago levels and, relative to the five-year average, 3.4% less. This report came in on the low end of market expectations again this week, which ranged from 73-82 Bcf, but failed to push prices significantly higher this afternoon. The EIA is forecasting natural gas inventories will end the 2021 injection season 3% below the five-year average.
In Canada, prompt-month futures for AECO are trading at C$2.88/GJ, while Dawn is trading at C$3.21/GJ. Prices have continued their upward trend, with week-over-week increases of $0.06/GJ and $0.02/GJ at AECO and Dawn, respectively. Canadian natural gas storage for the week ending May 7th, 2021 was sitting at 357 Bcf, after an overall injection of 6 Bcf. This injection increases storage inventories to 47 Bcf below the 5-year average and 7 Bcf below storage levels last year at this time.
– Karyn Morrison, Energy Advisor / Grace Wilton, Senior Energy Advisor
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