The price rollercoaster for natural gas continues as Henry Hub natural gas futures for November reached the highest closing price since December 2008 this week, on concerns that surging global natural gas prices in Europe and Asia will further influence prices in North America. The November contract closed at US$6.312/MMBtu on Tuesday, before reversing to fall over 63 cents to close at US$5.675/MMBtu yesterday. Prices pulled back after Russia’s President Vladimir Putin said the country is ready to “help” stabilize global energy markets, suggesting they could sell more gas to European spot buyers and existing long-term contracts. Henry Hub natural gas futures are trading at US$5.64/MMBtu as of 1:30pm EDT Thursday afternoon. Dry gas production is currently estimated at 92.3 Bcf/d, as production has trickled back after Hurricane Ida negatively impacted production in the Gulf of Mexico in late August. With stagnant production, strong export demand and weather uncertainty, the risk of volatility persists as we head into the winter heating demand season.
The EIA estimated working gas storage was 3,288 Bcf for the week ending October 1st, following an overall injection of 118 Bcf. The injection was higher than market expectations averaging 105 Bcf, along with the five-year average injection of 81 Bcf. Storage levels are now 13.9% below year-ago levels and, relative to the five-year average, 5.1% less. For this week, ending tomorrow, the market expects a 90 Bcf injection, as lower wind generation elevated power burn demand.
In Canada, prompt-month futures for AECO are trading at C$5.35/GJ, while Dawn is trading at C$6.57/GJ. Prices have continued their upward trend, with week-over-week increases of $0.96/GJ and $0.21/GJ at AECO and Dawn, respectively. Both the Dawn Next Day Index and the AECO-plus-Empress transportation prices have climbed by C$1/GJ in the last week. North American Natural Gas Indices have been moving in step with Henry Hub, which is continuing to follow the volatile movements in the global natural gas markets, against which our Canadian price increases pale in comparison, frankly. Asia-Pacific spot LNG prices hit a fresh record high October 6th, with the JKM benchmark surpassing US$50/MMBtu for the first time ever, as the gas price crisis in Europe grows more severe, increasing global competition for LNG cargoes. The Dutch TTF natural gas front month is now at US$37/MMBtu – over six times as high it was in March at US$6/MMBtu, whereas November futures for JKM are at US$34/MMBtu – 5 times its value this past March. Point Logic reports Canadian natural gas storage for the week ending October 1st was sitting at 649 Bcf, after an overall injection of 14 Bcf. This injection increases storage inventories to 7.9 % below the 5-year average and 15.5 % below storage levels last year at this time. Eastern storage levels are now at 91% capacity and Western storage is 69% full. Injections for the week ending tomorrow are expected to come in at 14 Bcf.
– Karyn Morrison, Energy Advisor
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