Prompt month has rolled over to January and Henry Hub natural gas futures for December settled at US$2.89/MMBtu at yesterday’s close. Pricing volatility continued earlier this week with prices up over 10% higher from last week’s low of US $2.54/MMBtu. With the U.S. Thanksgiving holiday week, the market reacted to the EIA storage report that was released early, strong Liquified natural gas (LNG) exports and cooler weather forecasts. The EIA estimated working gas storage was 3,940 Bcf for the week ending November 20th, 2020, following a withdrawal of 18 Bcf. This report was on the low end of market expectations which varied from 18-26 Bcf, helping to drive prices higher yesterday. Storage levels are now 8.9% above year-ago levels and, relative to the 5-year average, 6.8% greater.
With year-over-year dry gas production levels down by almost 4% and year-over-year net exports up by 2.2%, we can expect the storage surplus to dwindle before long. For the next 10 days most major weather models are showing that the U.S. is expecting above average Total Degree Days. The colder weather will likely remind the market how delicate the supply situation is this year, so we can expect futures prices to rise further as heating demand goes up.
In Canada, December futures for AECO traded at C$2.75/GJ, while Dawn trading at C$3.21/GJ. Prices for both AECO and Dawn trended higher week-over-week by C$0.20/GJ and C$0.17/GJ respectively. The November spot rate at Dawn has averaged C$2.92/GJ month-to-date and AECO has averaged C$2.74/GJ month-to-date. Canadian natural gas storage for the week ending November 20th, 2020, was sitting at 777.7 Bcf, after a withdrawal of 12.2 Bcf, 1.54% lower than last week and up 33.2% from last year at this time. Eastern Canada saw a withdrawal of 5.7 Bcf and Western Canada had a withdrawal of 6.5 Bcf.
– Karyn Morrison, Energy Data Analyst / Grace Wilton, Energy Data Analyst
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