After the EIA reported last week’s official injection of 81 Bcf 11% higher than expected, prompt month Henry Hub futures prices bounced up from a gentle, eight-cent descent up to the current trading levels ball parking U.S.$2.40/MMBtu. So, as we reported last week (insert feather in cap), U.S.$2.40/MMBtu seems to be the appropriate support level for August at Henry and we may be saying goodbye to the bargain basement prices we saw on June 20th when August gas hit its recent low of US$2.13/MMBtu. As of July 5th, US natural gas storage levels are now at 2,471 Bcf, up 12.5% from last year and 5.4% below the 5-year average. We are 66% of the way to where we anticipate being end-of-injection season, which is 3,700 Bcf or 92.5% of the topped-up 4,000 Bcf level.
North of the border, Dawn spot prices are nice and low, mirroring the U.S.
Canadian storage levels grew by 13.7 Bcf to 402.7 Bcf for the same week ended July 5th. Overall, nationally, we are 7.4% below last year’s levels with Eastern Canada up 14.3% and Western Canada down 15.3%. Being down by 15.3% is important to note, because we were down by 15.2% two weeks ago. This does not bode well for anticipated future spot prices out West since storage is not filling up at the rate we would expect at this time of year.
AECO 5a spot prices have shot up since Monday July 8th when they averaged C$1.23/GJ, up from the C$0.90/GJ range the previous week. Currently the 5a is trading at C$2.28/GJ and the month-to-date AECO 5a spot price is averaging C$1.11/GJ. We anticipate elevated prices to continue through to mid-August due to Enbridge’s BC T-South pipeline – Station 4B South capacity constraints caused by maintenance and expansion efforts related to the T-South Reliability and Expansion Program. These constraints seem to be scheduled to be lifted sometime in the second half of August, when capacity is expected to go back to “normal” levels.