By 10 a.m. this morning the traded price for prompt month natural gas futures at Henry Hub had dropped over US$0.06/MMBtu from the open pricing of US$3.826/MMBtu in anticipation of the EIA’s storage report announcing an injection of around 39 Bcf for the week ending August 11th, suppressing prices to their expected support levels in the mid US$3.70’s/MMBtu. The actual reported injection was 46 Bcf with an implied flow of 42 Bcf, resulting in no significant changes to the price momentum established earlier this morning. As of noon today, September gas at Henry Hub was US$3.773/MMBtu, a full US$0.12/MMBtu below the closing price just one week ago. Current US stocks are at 2,822 Bcf which is, respectively, 16.2% and 5.8% less than year-ago and the 5-year average. Natural gas production was steady over the last week, at 92.9 Bcf/day in the U.S. and at 15.9 Bcf/day in Canada.
Weather models are forecasting the below-average temperatures that have been mercifully bestowed on the Western continent this week, to persist for the rest of the month. As such, we’re expecting the injection for the week ending August 20th to reach 60 Bcf.
North of the border, the Union Dawn Day Ahead Index has come down about C$0.18/GJ since last week and is now trading at C$4.4815/GJ. Conversely, the AECO 5a Same Day Index has gone up by over C$0.31/GJ to $3.0477/GJ, with the biggest price jump of C$0.17/GJ occurring from Tuesday to Wednesday this week.
In other news, reports out of South Asia indicate rising spot prices of LNG price in Asia (~US$17/MMBtu) have now made it more expensive for power generation than HSFO (High Sulphur Furnace Oil); therefore switching is expected to occur. Year-to-date, East Asia and Pacific regions have imported 72% more LNG from the US than in 2021, while South Asia has imported 101% more, year-over-year.
– Grace Wilton, Senior Energy Advisor
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