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.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
This year, the Canadian gas market has been suffering much of the same warm-winter hangover issues affecting the U.S. natural gas market. The most recent heating season was something of a bust in terms of being less frigid than average in key space-heating regions, leaving gas storage levels above average by the end of March 2023. In the case of Canada, this was set against the backdrop of rising domestic production in Western Canada and gas exports to the U.S. that had been running below average thanks to the warm winter. When you’ve got too little demand, rising supplies and reduced exports, the end result, naturally, is an oversupplied market when compared to historical averages.
Of course, this is not the first time — and won’t be the last — that the Canadian gas market has had to deal with an oversupply (or undersupply) situation heading into a non-heating season (April to October). We discussed gas market oversupply issues in our two-part series Got Me Under Pressure, where another warm winter (2019-20) had left the 2020 Canadian gas market too long on gas. As we suggested in that blog, the market took most of the oversupply that year and used it to send Canadian gas storage to record levels by the end of October. In East Bound and Down, we looked at the opposite situation of an undersupplied market thanks to the cold winter of 2021-22, considering the potential for storage levels that could be lower than average in both Eastern and Western Canada by the end of October 2022. As it turns out, storage levels in the east did not fall quite as low as we thought could happen, but the west did start the 2022-23 heating season at lower-than-average levels, as we had suggested.
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About the song
“The Equaliser” was written by The Clash (Joe Strummer, Mick Jones, Paul Simonon, Topper Headon) and appears as the third song on side four of their fourth studio album, Sandinista! The song’s lyrics focus on social inequality while the music is centered on a deep dub reggae bassline from Clash bassist Paul Simonon. The song further emphasizes The Clash’s foray into world music, in this case, dub reggae from Jamaica. Personnel on the record were: Joe Strummer (lead vocal, guitar), Mick Jones (guitar, backing vocal), Paul Simonon (bass, backing vocal), Topper Headon (drums), Tymon Dogg (violin), Lew Lewis (harmonica), and Jody Linscott (percussion).
Sandinista! was recorded between February-August 1980 at Power Station and Electric Lady in New York City, Channel One in Kingston, Jamaica, and Wessex in London. Produced by The Clash and mixed and engineered by Bill Price, the album was released in December 1980. It went to #24 on the Billboard 200 Albums chart and has been certified Gold by the Recording Industry Association of America. The 36-track, triple-LP was released at a lower price due to the band agreeing to a decrease in royalties. Three singles were released from the album.
The Clash were an English rock band formed in London in 1976 who were key players at ground zero of the British punk rock movement. They incorporated a variety of genres into their music, including punk, rockabilly, reggae, dub, and ska. They released six studio albums, two live albums, nine compilation albums, two EPs, and 31 singles. After the release of their final album, Cut the Crap, which featured Joe Strummer with a new lineup, the band called it quits in early 1986. Ten people had passed through The Clash since its formation. Joe Strummer died in December 2002 at the age of 50. The Clash were inducted into the Rock and Roll Hall of Fame in January 2003. All former members of the band have gone on to participate in various band and solo projects.
