Prompt month has rolled over to August and Henry Hub natural gas futures are trading at US$5.91/MMBtu as of 11:45pm EDT Thursday morning, down over 50 cents from yesterday’s close of US$6.498/MMBtu. Two back-to-back bearish storage builds have sent natural gas futures tumbling, as the extended outage at Freeport LNG export terminal is keeping 2.0 Bcf/d of liquified natural gas supplies in the US despite strong global LNG demand. Even still, supply concerns remain as hot summer weather will keep natural gas demand for power generation high with limited opportunities for gas-to-coal switching, so we are cautiously expecting traded prices to swing back up higher next week.
The EIA estimated working gas storage was 2,251 Bcf for the week ending June 24th, following an overall injection of 82 Bcf. The build was above market expectations averaging 75 Bcf, and higher than the five-year average injection of 73 Bcf. Storage levels are improving, now 11.6% below year-ago levels and, relative to the five-year average, 12.5% less.
In Canada, the June month-to-date AECO 5a spot rate is C$6.94/GJ, while the month-to-date Dawn Next Day weighted average index rate is currently C$9.00/GJ. Compared to May, June spot prices have decreased 2% at AECO and 6% at Dawn but have more than doubled over the past year. Prompt-month futures for AECO are trading at C$5.77/GJ, while Dawn is trading at C$7.72/GJ. Prices have fallen, with week-over-week decreases of $0.67/GJ and $0.34/GJ at AECO and Dawn, respectively. Point Logic reports Canadian natural gas storage for the week ending June 24th was sitting at 338 Bcf, after an overall injection of 19 Bcf. Eastern Canadian storage had an injection of 11 Bcf, and Western Canadian storage had an injection of 8 Bcf. Inventory levels are improving, averaging 2.4 Bcf/d in May, but remain historically low in Western Canada, forecasted to end October near the 5-year low. Storage inventories are 27% below the 5-year average and 23% below storage levels last year at this time. Canadian storage is 39% full, with Eastern storage levels now at 52% of capacity and Western storage 33% full. An injection of 19 Bcf is expected for the week ending tomorrow.
– Karyn Morrison, Energy Advisor / Grace Wilton, Senior Energy Advisor
Add comment