Henry Hub natural gas futures for December are trading at US$2.59/MMBtu as of 2:45pm EDT Thursday afternoon. Price volatility has continued, with forwards falling from a close of US$2.712/MMBtu yesterday to this morning’s low of US$2.525/MMBtu. Milder weather patterns in November and recent increases to production in the U.S. have been a driving factor in the price uncertainty. The EIA estimated working gas storage was 3,958 Bcf for the week ending November 13th, 2020, following an injection of 31 Bcf. This report is higher than market expectations of 10-15 Bcf. Storage levels are now 8% above year-ago levels and, relative to the 5-year average, 6.2% greater.
In Canada, prompt-month futures for AECO are trading at C$2.55/GJ, while Dawn is trading at C$3.04/GJ. Prices for both AECO and Dawn trended lower week-over-week by C$0.34/GJ and C$0.41/GJ respectively. Canadian natural gas storage for the week ending November 13th, 2020, was sitting at 789.9 Bcf, after an overall injection of 3.5 Bcf, up 0.44% from last week and up 33.7% from last year at this time. While Eastern Canada saw an injection of 7.6 Bcf, Western Canada had a withdrawal of 4.1 Bcf.
The November spot rate at Dawn has averaged C$3.02/GJ month-to-date, and this is due to the warm weather experienced late fall and early on this winter season. Recent longer-term weather outlooks have predicted a mild December but the potential for heavy snowfall throughout the winter. The big upward price driver is the fact that year-over-year production levels are down due to COVID-related demand destruction and plummeting crude oil prices in the U.S.
– Karyn Morrison, Energy Data Analyst