Henry Hub natural gas futures for October retreated below US$8/MMBtu the past few days, trading at $7.14/MMBtu as of 2:30pm EDT Thursday afternoon. A triple-digit storage injection and strengthening US gas production, reaching a record level over 100 Bcf/d earlier this month, contributed to the pullback, along with yesterday’s demand-destroying 0.75% interest rate hike by the US Fed – now US and Canada both sit at 3.25%. The risks of uncertainty and volatility persist, however, with the possibility of storms in the Gulf of Mexico disrupting production (and LNG export shipments) as we head into hurricane season, along with the recent threats of escalation posed by Russia and the ongoing energy crisis impacting the stability of global energy prices.
The EIA estimated working gas storage was 2,874 Bcf for the week ending September 16th, following an overall injection of 103 Bcf. The build was above with market expectations averaging 95 Bcf and the largest injection to-date in 2022. The storage deficit is narrowing, with storage inventories now 6.4% below year-ago levels and, relative to the five-year average, 10.4% less. An injection of 86 Bcf is expected for the week ending tomorrow.
In Canada, prompt-month futures for AECO are trading at C$4.44/GJ, while Dawn is trading at C$8.64/GJ. Prices have fallen at Dawn, with a week-over-week decrease of $1.83/GJ, whereas prices increased by $0.10/GJ at AECO. Point Logic reports Canadian natural gas storage for the week ending September 16th was sitting at 581 Bcf, after an overall injection of 19 Bcf. Eastern Canadian storage had an injection of 13 Bcf, and Western Canadian storage had an injection of 6 Bcf. Storage levels are now 11% below the 5-year average and 6% below storage levels last year at this time. Canadian storage is 66% full, with Eastern storage levels now at 86% of capacity and Western storage 59% full. An injection of 20 Bcf is expected for the week ending tomorrow.
– Karyn Morrison, Energy Advisor / Grace Wilton, Senior Energy Advisor