Market volatility continued this week, with Henry Hub prompt-month futures for July closing at a high of US$3.749/MMBtu on Monday, July 12th, before pulling back to close at US$3.66/MMBtu yesterday and trading at US$3.63/MMBtu as of 1:15pm EDT Thursday afternoon. Hot weather and strong liquefied natural gas (LNG) export demand are continuing to put upward pressure on prices, as both reduce storage inventories. The EIA estimated working gas storage was 2,629 Bcf for the week ending July 9th, following an injection of 55 Bcf. Storage levels are now 17.1% below year-ago levels and, relative to the five-year average, 6.7% less. This report came in slightly higher than market expectations, which ranged from 39-53 Bcf, with prices sliding 4 cents from this morning’s open of US$3.67/MMBtu. For this week, ending tomorrow, the market expects a 44 Bcf injection, as warmer temperatures increased power burn demand.
In Canada, prompt-month futures for AECO are trading at C$3.35/GJ, while Dawn is trading at C$4.13/GJ. Prices have continued their upward trend, with week-over-week increases of $0.15/GJ and $0.12/GJ at AECO and Dawn, respectively. July spot market prices continue to increase compared to the month prior, with AECO averaging $3.63/GJ month-to-date, and the Dawn spot price averaging $4.08/GJ. Prices at both AECO and Dawn reached a daily average spot price over $4.00/GJ, the highest since February 2021. The historic heat wave temporarily reduced production, increased natural gas demand for power burn and elevated Canadian exports to the Pacific Northwest. As a result, total Canadian inventories flipped from injections to withdrawals for three consecutive days from June 28th – June 30th to balance the market, which is an unusual occurrence in the summer. Canadian natural gas storage for the week ending July 9th was sitting at 447 Bcf, after an overall injection of 14 Bcf. This injection increases storage inventories to 16.1% below the 5-year average and 20.5% below storage levels last year at this time. Eastern storage levels are now at 57% capacity and Western storage is 50% full.
– Karyn Morrison, Energy Advisor
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