Henry Hub natural gas futures have surged past US$9/MMBtu, reaching the highest level since 2008 amid supply concerns. Natural gas prices have tripled over the past year alongside the ongoing Russian-Ukraine conflict, which is impacting global energy markets, strong demand for US liquified natural gas (LNG) exports, weak storage injections and the start of summer cooling demand. US dry natural gas production is hovering around 94 Bcf/d, below the 97 Bcf/d level needed to significantly reduce the storage deficit ahead of next winter. US production is projected to trend up 4% steadily over the next twelve months and we are forecasting winter prices, including futures, to correct down from the current high levels.

The EIA estimated working gas storage was 1,812 Bcf for the week ending May 20th, following an overall injection of 80 Bcf. The bullish build was below market expectations averaging 90 Bcf and smaller than the five-year average injection of 97 Bcf. Storage levels are now 17.6% below year-ago levels and, relative to the five-year average, 15.3% less.

In Canada, prompt-month futures for AECO are trading at C$7.91/GJ, while Dawn is trading at C$10.58/GJ. Prices have risen, with week-over-week increases of $0.78/GJ and $0.61/GJ at AECO and Dawn, respectively. Point Logic reports Canadian natural gas storage for the week ending May 20th was sitting at 219 Bcf, after an overall injection of 7 Bcf. Eastern Canadian storage had an injection of 13 Bcf, while Western Canadian storage had a withdrawal of 6 Bcf. Storage inventories are 43% below the 5-year average and 39% below storage levels last year at this time. Canadian storage is 25% full, with Eastern storage levels now at 32% of capacity and Western storage 22% full. An injection of 7 Bcf is expected for the week ending tomorrow.

– Karyn Morrison, Energy Advisor

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