Henry Hub natural gas futures for June are trading at US$2.93/MMBtu as of 2:30pm EDT Thursday afternoon. Prompt-month futures continued to push against the upper resistance threshold this week, reaching a high of US$3.001/MMBtu on Tuesday, May 4th before retreating to close at US$2.938/MMBtu yesterday. Cooler weather forecasts remain for the upcoming weeks and US liquified natural gas (LNG) exports continue at near-record levels. Overall US gas supply for the week ending April 30th averaged 96.8 Bcf/d, 100 MMcf/d below the previous week. We are continuing to see a tightening of supply in the first few weeks of the injection season, as storage levels remain below historical levels, particularly compared to last year. The EIA estimated working gas storage was 1,958 Bcf for the week ending April 30th, following an injection of 60 Bcf. Storage levels are now 15% below year-ago levels and, relative to the 5-year average, 3% less. This slightly bullish report came in on the low end of market expectations ranging from 62-72 Bcf, helping to temporarily boost prices slightly higher this morning before ultimately closing a penny below their opening value. Not much has changed rig count-wise or weather-wise so prices remain in this holding pattern for now.
In Canada, the AECO 5A index settled at an average price of C$2.65/GJ in April, up 2.6% from March, while the Dawn Next Day index settled at C$3.00/GJ, up 1.3% from March’s average. Prompt-month futures for AECO are trading at C$2.82/GJ, while Dawn is trading at C$3.19/GJ. Prices have continued their upward trend, with week-over-week increases of $0.07/GJ and $0.03/GJ at AECO and Dawn respectively. Canadian natural gas storage for the week ending April 30th, 2021 was sitting at 353 Bcf, after an overall injection of 5 Bcf. This injection increases storage inventories to 39 Bcf below the 5-year average and 5 Bcf above storage levels last year at this time. Western Canadian pipeline infrastructure has improved dramatically since 2019, and the Western Canadian natural gas rig count is up 70% from 2019 levels. Production viability is supported by higher, more stable, AECO prices which are up year-over-year. Increased flow capacity to the US has recently come online and supports the uptick in Canadian imports to the US.
– Karyn Morrison, Energy Advisor / Grace Wilton, Senior Energy Advisor
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