Henry Hub natural gas futures for December are trading at US$3.01/MMBtu as of 1:00pm EDT Thursday afternoon. Price volatility persisted this week, as prices rebounded from a low of US$2.821/MMBtu on November 9th before reaching a high of US$3.06/MMBtu earlier today. While production declines and strong liquified natural gas (LNG) exports tighten the supply/demand imbalance, weather patterns continue to play a role in price uncertainty. With the US Veterans Day holiday closure on Wednesday, November 11th, the latest weekly EIA storage report will not be released until Friday. An estimated withdrawal of 3 Bcf is expected for the week ending November 6th, however market expectations vary from a withdrawal of 12 Bcf to an injection of 10 Bcf. For the upcoming winter heating season, industry analysts are forecasting above-average storage withdrawals and increased prices.
In Canada, the November spot market prices for AECO 5a and Dawn have continued to rise with month-to-date prices of C$2.81/GJ and C$2.87/GJ respectively, up over 14% from October’s average. Prompt-month futures for AECO are trading at C$2.89/GJ, while Dawn is trading at C$3.45/GJ. Prices for both AECO and Dawn trended lower week-over-week by C$0.07/GJ and C$0.09/GJ, respectively. In other news, The Government of Canada approved TC Energy’s 2021 NOVA Gas Transmission Ltd. (NGTL) System Expansion Project, allowing construction to begin in January. This expansion project as a whole will add 3.5 Bcf/d of incremental delivery capacity from 2020 to 2024. The 344 km new pipeline, from west of Red Deer to near Grande Prairie, Alberta, will benefit local distribution companies, power producers who are switching fuel sources from coal to natural gas, petrochemical companies and natural gas producers.
– Karyn Morrison, Energy Data Analyst