TD Notes The Gas Line
Weekly Gas Charts
Demand Charting Record Highs, Supply Stubbornly Stagnant: Demand across a variety of users (electrical power generation, industrial plants, pipeline distribution) charted record highs last week, while supply additions remain illusive - despite a strong pricing signal and an ~50% YTD increase in the U.S. gas-focused rig count. Inventories relative to trailing 12-month demand are charting record lows - this would be further exaggerated at current demand levels.
Canadian Gas Trailing U.S. Benchmark (Basis Widens): Canadian natural gas prices have not kept pace with those in the U.S., with AECO basis widening to ~US $3/mmbtu. We understand that this is due to the pipeline operators sending notices that limit firm transportation delivery (FTD) and injection capability.
Quick Summary: Gas inventories increased 80 Bcf w/w, which was slightly below the consensus expectation for an 89 Bcf injection and in line with the five-year average of an 84 Bcf injection. Storage is 15% below the 5-year average and 18% below year-ago levels. U.S. storage levels remain tight when compared with domestic/foreign demand (22% below normal levels as measured in days of supply, Exhibit 3). On this metric, we are charting record lows for this time of year. Expectations for next week are for an injection of 60-80 Bcf, which compares with the five-year average injection of 102 Bcf.