Market volatility continues after Henry Hub futures spiked over 80 cents on Wednesday to close at US$9.114/MMBtu before tumbling over 7% today, trading at US$8.46/MMBtu as of 1:00pm EDT Thursday afternoon. The threat of a US railroad workers’ strike impacting coal supplies to US power plants, directly leading to increased natural gas demand, was a major driver of the price rally this week. As reported, after 20 hours of intense contract talks, President Joe Biden’s administration announced major US railroads and unions secured a tentative deal to avert a rail shutdown that could have hit food and fuel supplies nationwide. Union members will now vote to accept the agreement. Even if the vote does not pass, a strike has been avoided for several weeks. The tight supply/demand balance continues to put upward pressure on domestic natural gas futures as record high global prices in Europe and Asia keep demand for US liquified natural gas (LNG) strong.

The EIA estimated working gas storage was 2,771 Bcf for the week ending September 9th, following an overall injection of 77 Bcf. The build was above market expectations averaging 72 Bcf but still lower than the five-year average injection of 82 Bcf. Storage levels are now 7.4% below year-ago levels and, relative to the five-year average, 11.3% less.

In Canada, the September month-to-date AECO 5a spot rate is C$3.21/GJ, while the month-to-date Dawn Next Day weighted average index rate is currently C$9.79/GJ. Prompt-month futures for AECO are trading at C$4.34/GJ, while Dawn is trading at C$10.47/GJ. Prices have fallen at AECO, with week-over-week decreases of $0.34/GJ, whereas prices increased by $1.63/GJ at Dawn. Point Logic reports Canadian natural gas storage for the week ending September 9th was sitting at 562 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. Storage inventories are 11.5% below the 5-year average and 6% below storage levels last year at this time. Canadian storage is 67% full, with Eastern storage levels now at 87% of capacity and Western storage 58% full. An injection of 20 Bcf is expected for the week ending tomorrow.

– Karyn Morrison, Energy Advisor

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