The price of natural gas futures continue to climb upward this week! Henry Hub natural gas futures for July are trading at US$3.14/MMBtu as of 1:30pm EDT Thursday afternoon. As published in their June Short-Term Energy Outlook report, the EIA now expects Henry Hub spot prices will average $3.07/MMBtu in 2021, up from the 2020 average of $2.03/MMBtu. The higher natural gas prices are primarily reflective of continued growth in liquefied natural gas (LNG) exports across Asia, Europe and Mexico and increased US domestic natural gas consumption outside of natural gas used for power burn. The EIA estimated working gas storage was 2,411 Bcf for the week ending June 4th, following an injection of 98 Bcf. Storage levels are now 13.7% below year-ago levels and, relative to the five-year average, 2.2% less. This report was in line with market expectations which ranged from 95-103 Bcf, with prices retreating from the high of US$3.20/MMBtu earlier this morning. The EIA is now forecasting natural gas inventories will end the 2021 injection season (end of October) 4% below the five-year average, higher than the 3% it forecasted a month ago.
In Canada, prompt-month futures for AECO are trading at C$3.02/GJ, while Dawn is trading at C$3.40/GJ. Prices have continued their upward trend, with week-over-week increases of $0.04/GJ and $0.05/GJ at AECO and Dawn, respectively. Canadian natural gas storage for the week ending June 4th was sitting at 394 Bcf, after an overall injection of 14 Bcf. This injection increases storage inventories to 63 Bcf below the 5-year average and 57 Bcf below storage levels last year at this time. Both Eastern and Western storage levels are now 46% full. The Canadian Energy Regulator (CER) released a report entitled Canada’s Pipeline System 2021: Understanding CER-Regulated Infrastructure which states Canada was the sixth largest producer of natural gas in the world in 2019, accounting for 4.3% of global supply. In 2020, Canada exported 43% of the natural gas produced, primarily to the US. Demand for natural gas in Canada has been rising over the past five years, with the largest source of demand coming from the industrial sector, which includes oil sands production and electric generation.
– Karyn Morrison, Energy Advisor
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