Natural gas futures prices continue to soar, as cold weather forecasts for the first week of February are keeping prices above US$4/MMBtu. Henry Hub futures for March are trading at US$4.275/MMBtu as of 2:45pm EDT Thursday afternoon. The upward price action continues to be influenced by increased heating demand and production declines, tightening the supply/demand balance. Demand remains strong for US liquified natural gas exports (LNG) with high global natural gas prices and ongoing supply concerns in Europe. The escalating conflict between Russia and Ukraine has US and European officials in discussions with natural gas suppliers globally to help reduce the impact if Russia were to cut off energy supplies.
The EIA estimated working gas storage was 2,591 Bcf for the week ending January 21st, following an overall withdrawal of 219 Bcf. This bullish pull was higher than market expectations, averaging 215 Bcf, and significantly higher than the five-year average of 161 Bcf. This is the largest withdrawal of the winter season to date, pushing storage levels down to 1% below the five-year average, and 10.6% below year-ago levels. A withdrawal of 287 Bcf is expected for the week ending tomorrow.
In Canada, prompt-month futures for AECO are trading at C$4.35/GJ, while Dawn is trading at C$5.21/GJ. Prices have risen, with week-over-week increases of $0.01/GJ and $0.25/GJ at AECO and Dawn, respectively. Point Logic reports Canadian natural gas storage for the week ending January 21st was sitting at 482 Bcf, after a withdrawal of 27 Bcf. This withdrawal decreases storage inventories to 9.4% below the 5-year average and 16.2% below storage levels last year at this time. Canadian storage is 55% full, with Eastern storage levels now at 69% of capacity and Western storage 50% full. A withdrawal of 23 Bcf is expected for the week ending tomorrow.
– Karyn Morrison, Energy Advisor
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