Prompt month has rolled over to March and Henry Hub natural gas futures are trading at US$2.65/MMBtu as of 1:00pm EDT Thursday afternoon. Futures for February settled at US$2.76/MMBtu at yesterday’s close, with prices pushing higher over the past few days, up $0.221 from a week earlier and up $0.826 from last year, as forecasts for colder weather patterns in February are expected. Overall, total US demand declined in the week ending January 22nd, due to a decrease in natural gas consumed by electric power plants to generate electricity (power burn), but is forecasted to rise 15.8 Bcf/d to average 120.8 Bcf/d for the week ending January 29th. The EIA estimated working gas storage was 2,881 Bcf for the week ending January 22nd, 2021, following a withdrawal of 128 Bcf. This report is slightly lower than market expectations of 134-136 Bcf. Storage levels are now 2.8% above year-ago levels and, relative to the 5-year average, 9.3% greater.
In other news, in the January Short-Term Energy Outlook report, the U.S. Energy Information Administration (EIA) expects energy-related carbon dioxide (CO2) emissions in the U.S to increase in 2021 and 2022 by 4.7% and 3.2%, after declining by 11.1% in 2020 because of reduced energy consumption and travel during the COVID-19 pandemic. Even with the expected growth over the next two years, CO2 emissions in 2022 are forecasted to remain 3.9% lower than 2019 levels. Natural gas accounted for approximately 36% of total energy-related CO2 emissions in 2020. The EIA expects emissions from natural gas to decline in 2021 and 2022 due to reduced natural gas consumption, as natural gas prices rise relative to coal prices.
In Canada, prompt-month futures for AECO are trading at C$2.78/GJ, while Dawn is trading at C$3.21/GJ. Prices are continuing to track upwards, with week-over-week increases of $0.18/GJ and $0.26/GJ at AECO and Dawn, respectively. The January spot rate at Dawn has averaged C$2.99/GJ month-to-date and AECO has averaged C$2.56/GJ. Canadian natural gas storage inventories are still trending higher than year-ago levels as well as the 3-year average.
– Karyn Morrison, Energy Advisor
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