Prompt month has rolled over to July and Henry Hub natural gas futures are trading at US$2.95/MMBtu as of 1:30pm EDT Thursday afternoon. The June contract closed yesterday at US$2.967/MMBtu, up $0.02/MMBtu from a week earlier and up $1.191/MMBtu from last year. Liquefied natural gas (LNG) exports remain strong and weather continues to be a key factor for power generation demand as we move into the summer months. The EIA reports natural gas-fired generation has decreased nearly 7% in the first four months of 2021 compared to 2020, the first year-over-year decline since 2017. The decline is a result of higher natural gas prices and increased competition from renewables with capacity additions to wind and solar power plants. The EIA forecasts natural gas-fired generation will decline 9.1% in 2021 and continue to decline by 0.7% in 2022. The EIA estimated working gas storage was 2,215 Bcf for the week ending May 21st, following an injection of 115 Bcf. Storage levels are now 14.7% below year-ago levels and, relative to the five-year average, 2.8% less. This bearish report came in higher than market expectations which ranged from 106-110 Bcf, driving prices lower from morning’s high of US$3.024/MMBtu.

In Canada, prompt-month futures for AECO are trading at C$2.96/GJ, while Dawn is trading at C$3.29/GJ. Prices have continued their upward trend, with week-over-week increases of $0.05/GJ and $0.07/GJ at AECO and Dawn, respectively. Canadian natural gas storage for the week ending May 21st, 2021, was sitting at 377 Bcf, after an overall injection of 13 Bcf. This injection increases storage inventories to 53 Bcf below the 5-year average and 31 Bcf below storage levels last year at this time. Eastern storage levels are now at 36% capacity and Western storage is 48% full.

– Karyn Morrison, Energy Advisor

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