The February 2021 polar vortex will be one for the natural gas record books in the U.S. and Canada — and the month isn’t even over yet! Though no stranger to frigid weather, Canada’s natural gas market has felt the impacts of this month’s extreme cold on both sides of the border. Its own prices, demand, and storage withdrawals have reached multi-year or all-time records as gas buyers have jockeyed for molecules from anywhere they can get them. Gas exports to the U.S. have reached highs not seen for more than a decade, adding emphasis to what has been an emerging turnaround story for Canadian gas into the U.S. market. To top things off, the latest gas market records might be a preview of what is to come in the next few years as Canada’s structural demand for natural gas continues to increase, regardless of how cold it is. Today, we describe all the latest Canadian gas market action and what might be in store for next winter.
In the past week, we have been discussing the impacts that the extreme cold snap of February 2021 have had on energy markets. In our coverage last week, the impacts that the deep freeze has wrought on the U.S. natural gas and power markets have been plain to see, with skyrocketing gas prices (East Is East, West Is West) due to wellhead freeze offs (Terminal Frost), surging demand, and storage withdrawals that have struggled to balance both sides of the supply-demand equation (Perfect Storm). Cash prices at ONEOK Gas Transmission (OGT) hub in Oklahoma surged to an unheard of $1,250/MMBtu and some regions literally ran out of gas. However, the U.S. has not been alone in feeling the freakishly cold weather’s effects on demand, supplies, storage, and prices.
Canadian natural gas markets have also experienced turmoil due to the February extremes. Prices have swelled, new demand records have been set, supplies have fallen, and storage withdrawals have cranked up to never-seen-before levels to keep supply and demand in balance. With gas needed everywhere all at once it seems, even long-suffering Canadian gas exports to the U.S. have recently surged to levels not seen for more than a decade.
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