The Equaliser - Canadian Gas Market Slowly Rebalancing Thanks to Improved Exports, Less Production

RBN Energy Blogcast

In natural gas markets, warmer-than-average winters usually translate into oversupply conditions as heating demand draws less gas out of storage than what would normally be expected. When compounded by rapidly rising domestic production and soft gas exports, the result is even greater oversupply. That is exactly how the Canadian gas market finished the most recent heating season, facing a substantial oversupply of gas that, if it persisted, could result in domestic gas storage reaching capacity well before the start of the next heating season. However, when it comes to natural gas markets, or any other market for that matter, expect the unexpected. Gradually improving demand and export conditions, combined with a significant decline in domestic gas production event in Western Canada, has rapidly shifted the market from substantial to slight oversupply in a matter of months. This has reduced downward pressure on prices and created conditions that might lead to a more manageable storage level before the next heating season gets underway. In today’s RBN blog, we consider what has been generating the rapid shift in Canadian gas market balances this summer.