Henry Hub natural gas futures prices continue to swing on changing weather forecasts, trading at US$2.53/MMBtu as of 1:00pm EDT Thursday afternoon, after pushing above US$3/MMBtu on March 3rd. US Federal regulators have approved the restart of the last remaining liquefaction train at the Freeport liquified natural gas (LNG) export facility in Texas. Operations have been slowly ramping up after an explosion in June 2022 resulted in the largest LNG outage in US history. As reported in the Energy Information Administration (EIA) March Short-Term Energy Outlook (STEO), the EIA forecasts US LNG exports will average 12.1 Bcf/d in 2023, up 14% compared to 2022, and increase an additional 5% in 2024 as global demand remains robust. The EIA has revised its Henry Hub spot forecast, with 2023 prices now expected to average US$3/MMBtu, down 39% from the January forecast of $4.90/MMBtu; unexpected mild winter temperatures reduced heating demand, significantly improving storage inventories.
The EIA estimated working gas storage was 2,030 Bcf for the week ending March 3rd, following an overall withdrawal of 84 Bcf. The pull was within market expectations ranging from 62 to 91 Bcf, but was another bearish storage withdrawal compared to the five-year average of 101 Bcf. Storage levels are now 32.1% above year-ago levels and, relative to the five-year average, 21.5% greater.
In Canada, March spot market prices remain lower than previously forecasted, with a month-to-date AECO 5a average of C$3.23/GJ and a current Dawn Next-Day average index rate of $3.52/GJ. Strengthening production and warmer winter temperatures have put downward pressure on prices. Point Logic reports Canadian natural gas storage for the week ending March 3rd was sitting at 384 Bcf, after an overall withdrawal of 21 Bcf. Eastern Canadian storage had a pull of 12 Bcf, while Western Canadian storage had a withdrawal of 9 Bcf. Storage levels are now in a surplus, 60% above prior-year storage levels and 16% greater than the five-year average. Canadian storage is 44% full, with Eastern storage levels now at 47% of capacity and Western storage at 44%. A net withdrawal of 9 Bcf is expected for the week ending tomorrow.
– Karyn Morrison, Energy Advisor
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