TD Notes The Gas Line
Weekly Gas Charts
Demand Returned to Relatively Normal Levels Last Week While Supply Additions Remain Modest. After charting record highs the last couple weeks, natural gas demand returned to more normalized levels. Significant 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 still charting record lows.
Canadian Gas Trailing U.S. Benchmark (Basis Remains Wide): Canadian natural gas prices have not kept pace with those in the U.S., with AECO basis remaining at ~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 90 Bcf w/w, which was in line with the consensus expectation for an 87 Bcf injection and slightly below the five- year average of a 102 Bcf injection. Storage is 15% below the 5-year average and 17% 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 90-110 Bcf, which compares with the five-year average injection of 104 Bcf.