Natural gas prices decreased slightly, with a market activity range of US$0.162/MMBtu

Excerpts from our Weekly Energy Report

This week’s authors: John Kiemele and Deighton Jarrett

Natural Gas / Gaz Naturel

Henry Hub natural gas futures for June are trading at US$2.561/MMBtu. Prices hit a peak of US$2.700/MMbtu on May 20th and have since come down. The EIA estimated working gas storage was 1,753 Bcf for the week ended May 17th, representing a net increase of 100 Bcf from the week previous. Storage levels are now 8.5% above year-ago levels and 13.5% below the 5-year average. Recent injections are consistently above their 5-year average, as we slowly steer toward a net 0% change.

In Canada, June prompt-month futures for AECO are trading at C$0.90/GJ, whereas Dawn is trading at C$2.98/GJ. Week-over-week prices have increased by C$0.18/GJ at AECO and decreased by C$0.07/GJ at Dawn. The rise in prices at AECO is uncharacteristic for this time of year, as we typically see prices settle into summer lows.

The elevated AECO prices are possibly due to a combination of reduced NGTL pipeline maintenance activity (affecting less than 0.33 Bcf/day of flow) and Enbridge’s T-South Reliability and Expansion Program, which, since May 6, has been causing curtailments on B.C. natural gas pipelines that ship to Huntingdon/Sumas at the BC/US border.

This is quite likely increasing demand for gas sourced at AECO which is, in turn, putting upward pressure on the AECO index.

After an injection of just 2.69 Bcf, Canadian natural gas storage for the week ended May 3rd was sitting at 274.1 Bcf – 13% below year-ago levels. Please note, storage levels have not yet been updated for the week ended May 10.