TD Notes The Gas Line
Weekly Gas Charts
Explosion and Fire at Freeport LNG Yesterday: One of the largest U.S. LNG export facilities (Freeport LNG in Texas - ~2 Bcf/d) will be shut down for at least three weeks following an explosion at its Gulf Coast facility yesterday which will limit offtake capacity and could lead to larger domestic inventory builds in the short-term, in our view. 1-month forward Henry Hub prices have since dropped ~10%.
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 relatively wide. 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 97 Bcf w/w, which was in line with the consensus expectation for an 97 Bcf injection and slightly below the five- year average of a 104 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 75-95 Bcf, which compares with the five-year average injection of 94 Bcf.