Prompt month has rolled over to June and Henry Hub natural gas futures are trading at US$7.03/MMBtu as of 1:15pm EDT Thursday afternoon, down over 30 cents from yesterday’s close of US$7.339/MMBtu. Natural gas futures surged on Wednesday, as global supply uncertainty remains after Russian announced it was cutting off natural gas supplies to Poland and Bulgaria. Gazprom, Russia’s state-owned energy firm, halted gas supplies for failing to pay for gas in rubles. Geopolitical tensions continue to fuel volatility, with the potential for Gazprom to cut gas supplies to other European countries. US dry natural gas production was estimated at 91.3 Bdf/d on Wednesday, an 80-day low, as weather-related production issues and facility outages impacted production levels. Production is expected to begin recovering and should reach 94-95 Bcf/d by Monday or Tuesday next week. Rig counts continue to trend upward and can be expected to impact production within a four-to-six month window.
The EIA estimated working gas storage was 1,490 Bcf for the week ending April 22nd, following an overall injection of 40 Bcf. The build was in line with market expectations averaging 38 Bcf, but smaller than the five-year average injection of 53 Bcf. Storage levels are now 21.4% below year-ago levels and, relative to the five-year average, 17% less.
In Canada, prompt-month futures for AECO are trading at C$6.55/GJ, while Dawn is trading at C$8.61/GJ. Prices have risen, with week-over-week increases of $1.35/GJ and $0.57/GJ at AECO and Dawn, respectively. Cooler-than-normal temperature are limiting storage injections, adding to year-over-year and five-year average storage deficits. Canadian heating degree-days over the last week were 38% above the ten-year normal and 19% above the same week last year. Point Logic reports Canadian natural gas storage for the week ending April 22nd was sitting at 223 Bcf, after an overall injection of 4 Bcf. Eastern Canadian storage had an injection of 7 Bcf, while Western Canadian storage had a withdrawal of 3 Bcf. Storage inventories are 34.8% below the 5-year average and 30.5% below storage levels last year at this time. Canadian storage is 26% full, with Eastern storage levels now at 22% of capacity and Western storage 28% full. An injection of 10 Bcf is expected for the week ending tomorrow.
– Karyn Morrison, Energy Advisor
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