Natural gas futures have been extremely volatile, with Henry Hub prompt-month futures holding below US$6/MMBtu after dropping ~50% to a seven-month low of US$4.959/MMBtu on Friday October 21st. Prices have fallen from the August highs as mild weather, record natural gas production and lower liquified natural gas (LNG) exports have allowed for larger-than-normal storage injections over the past month, increasing the amount of gas in storage before winter. Large daily price swings for natural gas have become more common this year, with prices quickly moving +/- 20 to 30 cents. Natural gas supplies remain a concern heading into the heating season, with colder weather coming and increasing LNG exports.

The EIA estimated working gas storage was 3,394 Bcf for the week ending October 21st, following an overall injection of 52 Bcf. The build was lower than market expectations averaging 58 Bcf, and fell short of the five-year average injection of 66 Bcf. Storage levels are now 4% below year-ago levels and, relative to the five-year average, 5.5% less. An injection of 96 Bcf is expected for the week ending tomorrow.

In Canada, the October month-to-date AECO 5a spot rate is C$3.20/GJ, while the month-to-date Dawn Next Day weighted average index rate is currently C$6.66/GJ. Prompt-month futures for AECO are trading at C$5.41/GJ, while Dawn is trading at C$6.92/GJ. Prices have risen week-over-week, increasing by $0.21/GJ at both Dawn and AECO. Point Logic reports Canadian natural gas storage for the week ending October 21st was sitting at 625 Bcf, after an overall injection of 8 Bcf. Eastern Canadian storage had an injection of 3 Bcf, and Western Canadian storage had an injection of 5 Bcf. Storage levels are now 11% below the 5-year average and 7% below storage levels last year at this time. Canadian storage is 72% full, with Eastern storage levels now at 97% of capacity and Western storage significantly lower at 62%. An injection of 16 Bcf is expected for the week ending tomorrow.

– Karyn Morrison, Energy Advisor

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