Energy Aspects expects tomorrow’s EIA storage number to be a 21 bcf injection. Our forecasts for the next three storage weeks are injections of: 31 bcf, 42 bcf, and 35 bcf.
Forecasts continue to show cooler-than-normal weather over the next five to 10 day across most of the US, suggesting power sector gas demand will be lower than last year. Our balances show power sector gas demand down by 1.4 bcf/d y/y in the current week (ending 4 August) at 35.6 bcf/d. Last August was 17% warmer than the 10-year norm in terms of CDDs. Forecasts are showing a cooler trend for this month, meaning y/y power sector gas demand losses should push up towards 3.0 bcf/d from the 1.5-2.0 bcf/d level seen in July.
According to scrape data, Utica production touched a record high of 4.7 bcf/d on 31 July. Meanwhile, maintenance is impacting output elsewhere in the Northeast this week, with the unplanned outage at the Mobley gas processing plant in West Virginia cutting output by 0.3 bcf/d. Marcellus output has dipped slightly as a result, averaging 19.7 bcf/d since 29 July, compared to 20.2 bcf/d the five days prior. Current week US dry output is 0.3 bcf/d lower w/w at 72.1 bcf/d.
The McMahon plant in British Columbia (BC) continues to be plagued by issues just weeks after it returned to service after an extended outage. The plant’s firm capacity was cut to 50% due to operational issues on 26 July until further notice, while firm capacity at the Pine River plant in BC was also reduced to 30% from 28 July. Scrape data show that WCSB production has fallen to 13.7 bcf/d this week from over 14 bcf/d when the McMahon plant returned on 14 July. AECO prices have been volatile, plummeting to 0.79 $/mmbtu on 28 July before settling at 1.45 $/mmbtu on 31 July. Westcoast Station 2 prices have also been weak. The wider spread to Henry has boosted net Canadian exports, which have averaged 5.7 bcf/d in the current week, up by 0.3 bcf/d w/w.
LNG feedgas reached highs of 2.4-2.5 bcf/d on three consecutive days last week (27 to 29 July), but flows dropped abruptly on Monday (31 July) to 1.6 bcf/d. We still expect feedgas to hover around 2.3-2.5 bcf/d over the coming months as Sabine Pass Train 4 starts up. Structural demand uplift from LNG, Mexican exports and the industrial sector looks set to be higher by 1.7 bcf/d y/y over the two week period ending 18 August.
Front-month Henry Hub prices tumbled last week, settling on Tuesday at 2.82 $/mmbtu. Indeed, September prices broke through the 2.95 $/mmbtu and 2.85 $/mmbtu supports as cooler weather forecasts drove market sentiment. For the coming week, we do not expect prices to fall much further toward 2.7 $/mmbtu as the market appears to have priced in near-term weather indicators and there is nothing in the fundamentals to suggest further downward follow-through on price.
|Balance forecasts, bcf/d|
|Source: Energy Aspects|