Every gas storage injection season gives us a chance to size up how supply and demand components might influence how much gas can be stuffed away in underground reservoirs prior to the next heating season. For the Canadian storage injection season that is just getting underway, a number of factors have shifted that balance, resulting in a slowing rate of gas storage builds this year. A slower build, and subsequently lower storage levels by the end of the injection season than last year, seems likely to provide solid support for Canadian gas prices. Today, we review the latest developments and outlook for gas fundamentals in Canada.
The arrival of spring in North America brings with it more temperate weather, prompting people to get outside, do some spring cleaning, and shake off the winter cobwebs. This year, even more than most, we’re looking forward to coming out of our winter burrows (or pandemic bunkers), the beginning of baseball season, and, of course, the gas storage injection season. This period, traditionally running from April 1 to October 31, takes advantage of the lower space heating demand of the spring, summer, and early fall to replenish underground storage reservoirs across North America. It is also a time when market pundits develop forecasts of how much gas will be injected, and to what level storage reservoirs will fill, by the end of October and before the kick-off of the next heating season and another round of storage withdrawals.
It’s our turn at RBN to wade in and again develop an outlook for Canadian gas storage injections this year, similar to what we did last year in Got Me Under Pressure. That blog was followed by our Canadian winter storage withdrawal outlook, which we posted late in 2020, a time well before the Deep Freeze of February 2021 and the record activity that swamped the Canadian gas market in terms of demand, storage withdrawals, and exports to the U.S. Those February extremes clearly accelerated the overall drawdown of Canadian gas storage in the heating season that just ended.
Before delving into our outlook for this year’s injection season, let’s take a look at how Canadian gas storage finished up on March 31 and how our forecasts compared to the actual outcomes. As with most of our analysis of the Canadian natural gas market, we draw on data published every week in our Canadian NATGAS Billboard, RBN’s weekly guide for all things related to Canadian natural gas.
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