Henry Hub natural gas futures for January are trading at US$2.588/MMBtu as of 1:00pm EDT Wednesday afternoon, down 6.91% from a December 22nd close of $2.78/MMBtu. While yesterday’s ascent signaled an acknowledgement of colder weather in the short-term forecast, today’s pricing activity was seemingly tied to storage and other weather models’ more bearish weather outlooks released this morning. The EIA released its latest storage report today, instead of tomorrow, due to the Christmas holiday. While predictions for this week’s withdrawal ranged from 146-180 Bcf, working gas storage declined by 152 Bcf. This means inventory is sitting at 3,574 Bcf as of December 18th, 2020, 8.4% above year-ago levels and 6.5% greater than the 5-year average. Despite this storage cushion, the supply/demand imbalance continues to be threatened by reduced dry natural gas production and strong LNG exports. As such, we expect prices to rise over the course of 2021 versus their present-day traded values.
In Canada, prompt-month futures for AECO are trading at C$2.70/GJ, while Dawn is trading at C$3.22/GJ. Prices for both AECO and Dawn trended higher week-over-week by C$0.05/GJ and C$0.14/GJ, respectively. Canadian natural gas storage for the week ending December 18th, 2020 have not been released at this time.
In other natural gas-related news, Pembina Pipeline has announced that due to COVID-related expenditure cuts, it is cutting further growth spending and, consequently shelving projects such as its Jordan Cove LNG export project in Oregon and its petrochemical facility project in Alberta. However, it is going ahead with its Prince Rupert export (by rail) terminal expansion and its Empress NGL extraction facility project. The Empress development includes a terminal and fractionation facilities. The expansion was expected to be in service in 2020, will add approximately 30,000 bbls/d of propane-plus fractionation capacity to the company’s Empress East NGL system.
– Grace Wilton, Energy Data Analyst
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