Henry Hub natural gas futures for May are trading at US$2.50/MMBtu as of 1:30pm EDT Thursday afternoon. Prompt-month prices regained some strength yesterday, rebounding to close at US$2.52/MMBtu after reaching a weekly low of US$2.453/MMBtu on Tuesday. Despite updated weather forecasts calling for cooler temperatures for mid-to-late April, total US demand fell 1.5 Bcf/d alongside warmer temperatures this past week. In addition to increased liquefied natural gas exports, a key driver influencing the supply/demand imbalance will be demand for natural gas consumed by electric power plants to generate electricity (power burn) this spring. The EIA estimated working gas storage was 1,784 Bcf for the week ending April 2nd, 2021, following an injection of 20 Bcf. This report is in line with market expectations of 17-24 Bcf, resulting in minimal price movement today after the report was released. Storage levels are now 11.6% below year-ago levels and, relative to the 5-year average, 1.3% less.
For this week, ending tomorrow, we are expecting the EIA will report an injection over 3 times as high at about 62 Bcf. This coincides with the decline in Total Degree Days (TDD) as cold weather subsides, spring takes hold and we approach the season where more often than not, neither heating or cooling is required. The EIA published their April Short Term Energy Outlook and is expecting natural gas production to increase gradually over the course of the rest of 2021, reaching an average of 92.56 Bcf/d by December 2022. The build in production is anticipated to be met by increased LNG exports. EIA expects Henry Hub to average US$3.04/MMBtu in 2021 and US$3.11/MMBtu in 2022. En-Pro is in line with EIA’s forecast for the inventory of stored natural gas in the U.S. to be between 3,700-3,800 Bcf which is around the 5-year average.
In Canada, prompt-month futures for AECO are trading at C$2.44/GJ, while Dawn is trading at C$2.88/GJ. Prices for both AECO and Dawn trended lower week-over-week by C$0.02/GJ and C$0.08/GJ, respectively. Canadian natural gas storage for the week ending April 2nd, 2021 was sitting at 334 Bcf, after an overall withdrawal of 4 Bcf. This withdrawal decreases storage inventories to 42 Bcf below the 5-year average and 13 Bcf above storage levels last year at this time.
– Karyn Morrison, Energy Advisor / Grace Wilton, Senior Energy Advisor
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