Henry Hub natural gas futures for April are trading at US$2.61/MMBtu as of 1:00pm EDT Thursday afternoon, up $0.092/MMBtu from yesterday’s close of US $2.518/MMBtu. As we move into a low demand shoulder period, forward pricing will likely be impacted by increases in production and liquefied natural gas exports more than by weather. The EIA estimated working gas storage was 1,746 Bcf for the week ending March 19th, 2021, following a withdrawal of 36 Bcf. Storage levels are now 13.1% below year-ago levels and, relative to the 5-year average, 4.3% less. After three consecutive weeks of lower-than-expected withdrawals, this bullish report came in higher than market estimates ranging from 19-30 Bcf, helping to boost prices higher today. Cooler than normal weather throughout the continental US and strong liquefied natural gas exports contributed to the larger draw.
In Canada, prompt-month futures for AECO are trading at C$2.45/GJ, while Dawn is trading at C$2.85/GJ. AECO prices have remained relatively flat week-over-week, while Dawn has decreased by $0.03/GJ. Canadian natural gas storage for the week ending March 19th, 2021 was sitting at 337 Bcf, after an overall withdrawal of 18 Bcf. This withdrawal decreases storage inventories to 55 Bcf below the 5-year average, while remaining 4 Bcf above storage levels last year at this time.
In other news, earlier today the Supreme Court of Canada ruled that the federal carbon tax is constitutional and, as such, Canada’s national carbon tax will remain intact. The Greenhouse Gas Pollution Pricing Act was implemented in Canada in 2019, setting a minimum price on carbon emissions in provinces that do not have an equivalent provincial price. This law was challenged by Saskatchewan, Ontario and Alberta, arguing natural resources are under the province’s jurisdiction. As climate change is a threat to the whole country, a coordinated national approach is needed to curb greenhouse gas emissions. As mentioned a few weeks ago, effective April 1st, 2021, the federal carbon tax will increase from $30 to $40 per tonne. The carbon charge for natural gas will increase to 7.83 cents per cubic meter, up from the previous rate of 5.87 cents per cubic meter.
– Karyn Morrison, Energy Advisor
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