Henry Hub natural gas futures for January are trading at US$2.52/MMBtu as of 1:15pm EDT Thursday afternoon. Price weakening in the futures market continued this week, falling from the closing high of US$2.882/MMBtu on Monday, November 30. Even with natural gas production down and increased LNG exports, the driving factor is warmer near-term temperature forecasts for early December. The EIA estimated working gas storage was 3,939 Bcf for the week ending November 27th, 2020, following a withdrawal of 1 Bcf. This bearish report is lower than market expectations of 5-12 Bcf, putting downward pressure on prices. Storage levels are now 9.5% above year-ago levels and, relative to the 5-year average, 7.9% greater.
In Canada, the November AECO 5a index finished off to average C$2.71/GJ, up 15% from October, while the Dawn Next Day index finished off at C$2.83/GJ, up 23% from October’s average. Prompt-month futures for AECO are trading at C$2.49/GJ, while Dawn is trading at C$3.11/GJ. Canadian natural gas storage for the week ending November 27th, 2020, was sitting at 766.5 Bcf, after an overall withdrawal of 9.9 Bcf, down 1.27% from last week and up 31.2% from last year at this time.
Astonishingly, January 2021 futures at AECO and Dawn are now, respectively, trading C$0.60/GJ and C$0.76/GJ below month-ago levels. Environment and Natural Resources Canada recently published a revised 3-month deterministic forecast for Canada. Suffice it to say the map has a lot more red in it than it did one month ago and temperatures are now forecasted to be above seasonal. The same goes for the weather outlook maps recently published by the U.S. National Oceanic and Atmospheric Administration (NOAA). That said, the NOAA has not called off the La Niña for this winter, which is still forecasted to produce more storm conditions than “normal”.
– Karyn Morrison, Energy Data Analyst / Grace Wilton, Energy Data Analyst
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