Market volatility continues, as Henry Hub prompt-month natural gas futures have pushed above the US$4/MMBtu mark again, trading at US$4.20/MMBtu as of 1:15pm EDT Thursday afternoon. Prices are up over 30 cents from yesterday’s close of US$3.897/MMBtu, thanks to persistent hot temperatures, strong export demand, and a bullish storage report. Traders are closely watching the potential threat of a hurricane, expected to track into the Gulf of Mexico and approach Texas or Louisiana early next week. A significant storm could reduce production and disrupt liquefied natural gas (LNG) export facilities in the region. The EIA estimated working gas storage was 2,851 Bcf for the week ended August 20th, following an injection of 29 Bcf. This report came in lower than market expectations, which ranged from 37-40 Bcf, as hot weather caused increased natural gas demand for power generation. Storage levels are now 16.5% below year-ago levels and, relative to the five-year average, 6.2% less.
In Canada, prompt-month futures for AECO are trading at C$3.55/GJ, while Dawn is trading at C$4.47/GJ. Prices have continued their upward trend, with week-over-week increases of $0.07/GJ at both AECO and Dawn. The August month-to-date AECO 5A spot rate is C$2.81/GJ, down C$0.93/GJ from July’s AECO 5A spot price of C$3.74/GJ, while the month-to-date Dawn Next Day weighted average index rate is currently $4.56/GJ, up $0.31/GJ from July’s average of C$4.25/GJ. AECO 5A spot prices are continuing to fluctuate on a daily basis, as maintenance impacts Interruptible Transport capacity. Intermittent scheduled maintenance to TC Energy’s BC Foothills system (impacting flows to the US on the GTN pipeline), in addition to maintenance on NGTL’s system (impacting flows at the East Gate), has intensified price weakness.
– Karyn Morrison, Energy Advisor
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