It may be a few years yet before a liquefied natural gas industry pushes the price for Canadian natural gas back up to what it was a decade ago, but a "good old fashioned winter" has at least given Canadian gas producers a temporary windfall, according to TD Economics.
An unusually cold winter has increased the demand for gas for heating in North America, driving prices above $6 per MMBtu (1 million British thermal units), a TD Economics report released February 24 states.
In April 2012, the Henry Hub price for natural gas – the North American benchmark – slid below $2 per MMBtu, and gas prices have stayed well below $4 since then.
But prices spiked above $6 per MMBtu in early 2014. The increased demand has drawn down American gas inventories to 30% below the five-year average.
While the price spike is expected to be short-lived, analysts expect the demand for Canadian natural gas in 2014 will be its strongest in five years.
"Overlaid with higher futures prices over the next year, and 2014 looks to be a much for better year for Canadian producers," TD Economics states in its report.
"While the post-shale fundamentals of the natural gas market in North America remain in place, the demand spike from a very cold winter has dramatically improved the near-term situation for Canadian gas producers."
