heating degree days

In a part of the world where enduring a cold winter is often seen as a badge of honor, the latest cold blast that descended on Canada just before Christmas — and during Christmas in the U.S. — was another one for the natural gas record books. By almost every measure, the recent frigid temperatures, though not long-lasting, set new Canadian records for daily demand, storage withdrawals, and net exports to the U.S., and went well beyond the records set during Winter Storm Uri in February 2021. In today’s RBN blog, we delve into the latest record-busting Canadian gas data.

From a high of $6.14/MMBtu in February 2014 natural gas prices have fallen to $4.013/MMBtu yesterday (September 17, 2014). In large part the price decline reflects the recovery of gas storage levels from record lows in March at the end of a freezing winter. Booming production and a milder summer have provided the surplus supplies needed for injections to replenish inventories reasonably close to normal levels (the latest storage numbers are released by the Energy Information Administration (EIA) this morning (September 18, 2014). Today we describe the impact of supply and weather driven demand on storage levels.

Last Thursday (March 28, 2013) the CME Henry Hub natural gas futures contract closed out the first quarter of 2013 at $4.024/MMBtu (prices slipped 0.9 cents to $4.015/MMBtu Monday). A year ago the futures price was $2.126/MMBtu – about half what it is today. During that same period, US dry gas production has risen by 0.5 Bcf/d to 64.1 Bcf/d and natural gas power burn has fallen by 2.2 Bcf/d (source: Bentek). With production still increasing and demand from power generation falling it seems unlikely that the market can sustain $4/MMBtu prices. Today we look at the supply demand picture at the end of the winter season.

It’s the first week of March 2013 – the final month of the natural gas winter season. This winter has been colder than last so far reducing the record storage surplus that we started the season with. Natural gas prices have traded in a range between $3.25 and $3.50/MMBtu so far this year. Production continues at or near to record levels however and higher prices will likely reduce gas fired power generation. That means summer demand could be lower than last year and the storage surplus would rebound again. Today we review the current natural gas supply and demand situation.

Front month NYMEX natural gas prices reached a twelve-month high of $3.76/MMBtu this past Wednesday - falling back to $3.70/MMBtu yesterday. NYMEX prices have been on a rising trend ever since they dipped under $2/MMBtu back in April of this year but can they sustain that momentum?  The most important factor in answering that question over the next 4 months will be the weather. More specifically, will there be a winter this year and how much gas is withdrawn from storage as a result of the cold weather. Yesterday the EIA announced the first natural gas storage withdrawal of this winter.  Today we examine the start of the storage withdrawal season.