Henry Hub natural gas futures continue to climb this week as liquefied natural gas (LNG) export demand and natural gas consumption rose and production dipped lower. Henry Hub prompt-month futures for July are trading at US$3.44/MMBtu as of 1pm EDT Thursday afternoon, up over $0.10/MMBtu from yesterday’s close of US$3.333/MMBtu, and up $1.696/MMBtu from last year, as we head into summer peak demand. The EIA estimated working gas storage was 2,482 Bcf for the week ending June 18th, following an injection of 55 Bcf. This bullish report came in lower than market expectations, which ranged from 59-69 Bcf, as extreme hot weather in the US Southwest caused increased natural gas demand for power generation. This reflects a further tightening of the natural gas supply/demand balance, as storage levels are now 17.1% below year-ago levels and, relative to the five-year average, 5.8% less, driving prices higher from morning’s low of US$3.301/MMBtu. For this week, ending tomorrow, the market expects a 64 Bcf injection, as power sector demand is reduced and total supply is projected to increase by 0.1 Bcf/d.
In Canada, prompt-month futures for AECO are trading at C$3.20/GJ, while Dawn is trading at C$3.70/GJ. Prices have continued their upward trend, with week-over-week increases of $0.08/GJ and $0.12/GJ at AECO and Dawn, respectively. Canadian natural gas storage for the week ending June 18th was sitting at 420 Bcf, after an overall injection of 13 Bcf. This injection increases storage inventories to 69 Bcf below the 5-year average and 77 Bcf below storage levels last year at this time. Eastern storage levels are now at 53% capacity and Western storage is 49% full.
– Karyn Morrison, Energy Advisor
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