Market volatility continues, as Henry Hub prompt-month natural gas futures are trading at US$4.90/MMBtu as of 1:30pm EDT. After plunging to a low of US$4.752/MMBtu on Friday, November 12th, prices rebounded to reach a high of US$5.394/MMBtu on Tuesday with news that German regulators have suspended the certification process for the Nord Stream 2 pipeline. As reported, Gazprom affiliate Nord Stream 2 AG stated it would establish a subsidiary to operate the German stretch of the system, which is designed to move 5.3 Bcf/d from Russia to Europe. Regulators will restart the process once assets have been transferred to the new subsidiary; timing and effects on the pipeline’s operational date are still unclear. Unseasonably warm weather in parts of the US and dry gas production near historical highs at 95.2 bcf/d has helped keep prices below US$5/MMBtu. Weather will continue to drive the risk of volatility as we move into winter peak-demand season. The EIA estimated working gas storage was 3,644 Bcf for the week ending November 12th, following an overall injection of 26 Bcf. The injection was in line with market expectations ranging from 23-30 Bcf, as increased wind generation and milder weather reduced domestic demand in early November. Storage injections are rare at this time of year, with the five-year average for the week being a withdrawal of 12 Bcf. Storage levels are now 7.8% below year-ago levels and, relative to the five-year average, 2.2% less.
In Canada, prompt-month futures for AECO are trading at C$4.50/GJ, while Dawn is trading at C$5.62/GJ. Prices have declined, with week-over-week decreases of $0.19/GJ and $0.02/GJ at AECO and Dawn, respectively. Point Logic reports Canadian natural gas storage for the week ending November 12th was sitting at 672 Bcf, after an overall injection of 1 Bcf. This injection increases storage inventories to 5.6% below the 5-year average and 14.7% below storage levels last year at this time. Eastern storage levels are now at 97% capacity and Western storage is 70% full. A withdrawal of 1 Bcf is expected for the week ending tomorrow.
– Karyn Morrison, Energy Advisor
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