Natural gas markets continued yesterday’s rally with the NYMEX front month reaching $4.12 USD/MMBtu, a $0.17 USD/MMBtu or 4% increase from yesterday. The December contract is now $0.31 USD/MMBtu, or 8% higher, since it became the front month. Weather forecasts did once again revise slightly cooler; however, the NYMEX movement is primarily driven by non-fundamental factors. Bulls consistently drive up prices at the start of a new front month and look to take profit as the weeks progress. This volatility can often cause the NYMEX-Dawn basis to widen, but over the past week, the opposite has occurred with the basis tightening, showcasing Dawn’s relative strength.

Cash prices at Dawn have remained over $4 CAD/GJ for the last 9 days, well over the monthly average of $3.63 CAD/GJ. Pipeline flows indicate the facility continues to withdraw instead of injecting. Unlike the lower 48, Dawn is trailing last year’s storage volume by 2.4% so further withdrawals could put it at risk during the winter. Next week’s Enbridge storage data release will be telling to the state of the facility going into the winter.