Henry Hub natural gas futures for April are trading at US$4.63/MMBtu as of 1:30pm EDT Thursday afternoon, up 11 cents from yesterday’s close of US$4.526/MMBtu. Demand for US liquified natural gas (LNG) exports remain robust, with volumes near capacity as the Russian-Ukraine conflict continues. As reported in the EIA March Short-Term Energy Outlook, it is estimated US LNG exports will average 11.3 Bcf/d in 2022, up 16% from 2021. The EIA forecasts natural gas production to continue to increase with strong export demand, averaging 96.7 Bcf/d in 2022 and 99.1 Bcf/d in 2023. With the geopolitical instability, the risk of volatility remains; however, US natural gas supplies are sufficient to support domestic needs and heating demand will decrease heading into the shoulder season.
The EIA estimated working gas storage was 1,519 Bcf for the week ending March 4th, following an overall withdrawal of 124 Bcf. The pull was above market expectations averaging 117 Bcf, and above the five-year average withdrawal of 89 Bcf, reflecting a further tightening of the supply/demand balance. Storage levels are now 15.6% below year-ago levels and, relative to the five-year average, 16% less. The EIA expects natural gas inventories to end the withdrawal season 10% less compared to the 2017-21 average for this period as temporary freezes-offs in February reduced production. The EIA forecasts inventories will end the 2022 injection season (end of October) 4% less than the five-year average.
In Canada, prompt-month futures for AECO are trading at C$4.04/GJ, while Dawn is trading at C$5.34/GJ. Prices have fallen, with week-over-week decreases of $0.45/GJ and $0.23/GJ at AECO and Dawn, respectively. Point Logic reports Canadian natural gas storage for the week ending March 4th was sitting at 258 Bcf, after a withdrawal of 30 Bcf. This withdrawal decreases storage inventories to 31.4% below the 5-year average and 27.1% below storage levels last year at this time. Canadian storage is 30% full, with Eastern storage levels now at 19% of capacity and Western storage 35% full. The first injection for the season of 2 Bcf is expected for the week ending tomorrow.
– Karyn Morrison, Energy Advisor
Add comment