Average dry gas production dropped by 0.73 billion cubic feet per day (Bcf/d) or 5 Bcf during the report week of Jun 7. Over the last month, demand from power generation rose 7.0 Bcf/d (~20%) while demand from residential and commercial users dropped by around 5 Bcf/d. Demand from other sectors has remained stable. Dry gas imports from Canada has increased by 0.39 Bcf/d or 2.7 Bcf while exports to Mexico have also risen slightly by 0.09 Bcf/d or 0.6 Bcf. 

Our analysis leads us to expect a 109 Bcf storage build for the report week. Our expectation compares to the current 114 Bcf consensus whisper expectation and is almost 20% more than the five-year average of 92 Bcf.

Henry Hub prices have sunk slightly into the $2.40/MMBtu range and we believe the uncertainty surrounding tariffs could be one of the causes for the downward movement. Other reasons are bearish weather forecasts leading to weak demand until the heat intensifies. The strong injection levels for the past couple of weeks are also a contributing factor. All in, we don’t see any marked improvement in the prices until mid-June. 

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