Natural Gas Prices – Historical and Forecast

Natural gas futures prices in Canadian $/GJ are in red. The 12 month forecast is created for educational purposes and considers the forward 3 year futures price curve, analyst opinion, weather, oil prices, gas storage, drilling rates and economic indicators. See the natural gas score sheet for more info.

Gas has been trending up since hitting a seven year low on Sept 3, 2009. Market drivers are forecasted cold weather, the recovering economy, declines in gas production, and higher oil prices. Spot natural gas at 16 cents/m3 has almost doubled since settling at 9 cents/m3 in early September.

Futures market prices predict the market is now back to its previous long term up trend as each successive future month is priced higher that the previous month. As cold weather and falling production begin to reduce the stockpile of natural gas available to the recovering economy the price for gas could jump significantly by year end.

Indeed many professional investors are moving money into the commodity markets such as natural gas. These speculative investments have already lead to recent price volatility and this well may gain momentum as we move through 2010. Medium term technical indicators such as the 50 day moving average vs current price, or the 20 - 100 Day MACD oscillator and the 50 day parabolic time/price all are showing buy signals. Overall the medium term technical indicators average 75% on the Buy side.

Forecasts suggest that natural gas prices will track just below the trend line shown for the near future. How do fundamentals say that?

• Lower production from new gas wells, less new drilling and depletion of older wells.
• New electricity generation is usually gas fired. The gas to be used in planned natural gas generators in Ontario equal a quarter of TOTAL provincial annual demand.
• Supply is flat and is expected to remain so, and demand is up.

February 2009   What caused the Oil and Gas rise, and fall
A presentation by Simmons & Company , an independent investment bank specializing in the entire spectrum of the energy industry.

January 2009.  Signs of a gas bottom
Financial Post.  "The economic recession and demand destruction, such as the closing of industrial plants, is causing a decline in consumption. In the absence of a supply response, an economic recovery would be needed to balance the market. Fortunately, natural gas supply is very price elastic and production rates decline much faster for new gas wells than for oil wells. Natural gas wells lose 30% or more of their production capacity after the first year and more than 50% after two years. Up to 50% of North American gas production comes from wells drilled during just the past five years. Total industry production capability from existing wells declines by an average of more than 20% per year. In the absence of a sufficient quantity of new wells being drilled, supply goes down. Thus, analysis of supply activity, that is drilling rig activity, provides a significant leading indicator of supply response."

August 2008.  Is natural gas undervalued?
Financial Post.  "A stunning six-week decline in prices of crude oil, natural gas, and energy stocks bottomed out in mid-August. A rally through Thursday last week saw crude oil recover one-quarter of its losses, while energy stocks recovered one-third of losses. However the greatest losses and smallest rally was in natural gas prices, raising the question: is natural gas undervalued?"

August 2008.  Premium paid for oil over natural gas widest in 18 years
Financial Post.   Avery Shenfeld, senior economist at CIBC World Markets.

"The parting of the ways in the two markets in part reflects the fact that oil is a global price driven by world activity, while gas markets are regionalized and more sensitive to a sluggish U.S. economic pace,? he said in a report. Higher supplies of unconventional gas in the lower 48 states are also contributing to the pressure, Mr. Shenfeld added.

March 2008.  Oil Extraction Cost Trumps Reserves
Globe and Mail.  "According to the New York Mercantile Exchange, that price is currently around $100 a barrel and most of the long-dated WTI futures reflect a belief that the world will still be paying close to a three-digit oil price in five years time."

January 2008   Enbridge Bargain Price Won't Last   Enbridge and Union Gas are giving credits to customers to pay back previous overcharges, but this is coming to an end.

November 2007   OPG To Seek 14% Rate Hike   Ontario Power Generation, the generator of the majority of electricity in Ontario, is seeking a 14% hike in their rate for electricity.

November 2007   Outlook for Canadian Gas Deliverability   The amount of natural gas able to be delivered from Canadian producers to consumers is expected to decline over the next 3 years. Reduced drilling activity, caused in part by relatively low spot market prices, is aggravating this situation.

August 2007   Halifax To Get Natural Gas by December   A natural gas pipeline is (finally) being built across the harbour from Dartmouth. About 80% of downtown Halifax has signed on to switch.

August 2007.  Conference Board of Canada predicts gas prices to rise at 6% per year.

What was said at the annual Cambridge Energy Research Associates worldwide energy meeting, according to Canadian Enerdata? That North Americans will continue to face high prices to power, heat and cool their homes through at least 2008 and may even endure some natural-gas shortages during cold winters. "I would estimate prices would average about $7 through 2008," said Michael Zenker, an analyst with Cambridge Energy Research Associates. "The rising demand for gas, coupled with flat production, has tripled prices in the last four years. Relief should arrive then in the form of liquefied natural gas, imported to alleviate shortages of the increasingly popular fuel.

September 2004. Energy Pulse in depth article on supply, demand and pricing
Summary: "Natural gas is somewhere between a limit to growth and a disaster waiting to happen right now, and no one is doing anything about it. Only a few months of inclement weather will cause severe shortages and rocketing price spikes. There is a high risk of major availability declines with unimaginable economic impact, and there is no supply side solution."

Go to the Price Charts

What Drives Prices ?

Short Term - Weather, the US economy and gas storage levels.

• Pick your scenario. If this winter is warmer than normal and the US economy continues at it's current pace, the US Dept of Energy predicts that gas prices will rise by about 5%. However, if this winter is colder than normal, the DOE says that consumers can expect double digit percentage increases. What is it going to be? Check out this weather forecasting site.
• Gas storage levels coming out of the winter are higher than average

Long Term - Economic activity, demand/supply balance and the price of oil.

• Natural gas demand in North America is increasing at about 3 % per year whereas supply is increasing at about 1%
• Increasing economic activity, growth, new businesses and new homes increase gas use
• Production from many older gas wells is declining quite rapidly. More
• More natural gas is being used for electricity generation. Any new electricity capacity brought on line right now is generated by natural gas, rather than oil, coal, water or nuclear.
• As the price of crude oil increases, some industries switch to natural gas. Many developed this dual fuel capability when gas prices skyrocketed in 2001.
• Prices are not expected to come down until new major gas pipelines are built connecting new gas fields in Alaska and the Northwest Territories. That is at least 6 years away. Recent reports however suggest that virtually all of this northern gas will be used in to extract oil from the tar sands in Northern Alberta.
• Liquified Natural Gas (LNG) will become a factor in North America, but many terminals and custom tankers will have to be built.

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Energyshop.com provides unbiased natural gas price and electricity cost comparisons. This is valuable information and education for home and commercial, house and business. It's insurance against paying too much on current utility rates. We have historical data, supplier information, home heating calculations, natural gas price charts, maps to help you find your utility area, links to solar energy, green power and wind power sites.

There are many suppliers with consumer energy rates, natural gas prices and electricity costs in Canada including Direct Energy, OESC (Ontario Energy Savings Corp), AESC, Superior (SEM), Epcor, Enmax, Constellation NewEnergy (CNE), CEG, BCESC, Universal Energy and RiteRate. This information on electricity suppliers and open market rates is valid for Ontario, Alberta, Quebec, Manitoba, Saskatchewan, and BC (British Columbia). It covers gas distributed by Enbridge, Union, Kitchener utilities, Kingston, ATCO, Direct Energy Regulated Services, Teresen, Epcor ENMAX and GazMet. Canadian natural gas prices are available for deregulated provinces.

Some US states are deregulated and several have quite active markets. Georgia, Texas, Pennsylvania, Illinois and Ohio are active in 2007 and have the longest history. The most active marketers in Georgia are MX Energy, Georgia Natural Gas, Coweta-Fayette EMC, Gas South, GasKey, Infinite Energy, SCANA, Vectren and Walton EMC.

This price comparison search helps you find the cheapest electricity and cheapest natural gas among Canadian energy companies. While energy price information does not have the sex appeal of TV and electronics, it actually saves you much more money in your personal budget. If you sign a contract for 1 cent less per M3 (which is 27 cents/GJ), you will save about $30 per year. The difference between the highest and lowest price in Ontario is usually 5 cents, so signing with the lowest cost provider will save you $150 per year. Think about this when the door to door marketers and telemarketers talk to you.

We also provide educational information and links on such issues as Nox and Sox and CO2 reduction (Nitrous Oxide and Sulphur Dioxide and Carbon Dioxide). We are a consumer report on the energy industry. Real estate professionals like the information we provide on utility bills, cost history, on heating system conversion costs, and energy price forecasts to help their clients manage expenses and cost of living.

Links to the Hourly Ontario Energy Price HOEP are also available to guage the Ontario power industry. The HOEP is also referred to as the spot market for electricity, and the open market rate. We are working on links to the Alberta electricity power pool

Business customers have many more options for buying natural gas and electricity. They can buy full requirements gas contracts with all of the delivery and compressor fuel charges added, or they can buy naked price contracts based on NYMEX quotes, and pay all of the other charges quoted separately. Electricity can be either a fixed price for every kWh used regardless of timing, or a business can buy a block of electricity to best match their time of use. Business customers can buy from companies such as Coral (Shell Trading), Sempra, CNE, Direct Energy,