Market Snapshot: Below average natural gas storage inventories heading into the summer season
Release date: 2018-06-06
Due to a cold winter this year, natural gas inventories remain below the 5-year average heading into the summer season.
Generally, production of natural gas is steady throughout the year, while demand fluctuates with the seasons. Storage is used to help balance natural gas markets. Natural gas storage activity is divided into 2 seasons: injection, when gas is put into storage; and withdrawal, when gas is taken out of storage. Gas is typically injected into storage between 1 April and 31 October when demand is lower. Gas is withdrawn as needed between 1 November and 31 March to help meet higher demand in the winter months.
Winter natural gas demand in Canada is approximately twice as high as the demand in the fall and spring (also known as the shoulder seasons)Footnote 1. Demand in Canada increases in the winter for space heating requirements as cold temperatures arrive. Demand also increases slightly in the summer, to levels higher than in the shoulder seasons, but not nearly as high as in the winter. During the hottest months of the year, there is typically increased gas demand for electricity generation specifically to meet air conditioning demand.
According to the Canadian Gas Association, there were more heating degree daysFootnote 2 (HDDs) in North America during the winter of 2017/2018 than in 2016/2017. The winter was colder, for longer, resulting in higher natural gas demand and more reliance on storage to meet this demand. Despite steady production of natural gas in Canada and record high production in the United States (U.S.), cold temperatures contributed to maintaining storage inventories in Canada slightly below the 5-year average.
Source and Description
Description: The first graph shows monthly natural gas storage inventories in Canada, as well as the 5-year average for January 2015 to December 2018. The second graph shows combined monthly natural gas storage inventories in Canada and the U.S., as well as the 5-year average for January 2015 to December 2018.
With the start of the injection season on 1 April 2018, Canadian natural gas storage inventories totaled approximately 315 billion cubic feet, approximately 4% below the 5-year average. Due to below average temperatures in April, natural gas storage injections rates were below average. By mid-May, storage inventories in Canada totaled 336 billion cubic feet, 13% below average. Canadian inventories receded below the five-year average in April 2018, breaking a trend of above-average inventories held since October 2015.
Combined Canadian and U.S. storage inventories totaled 1 964 billion cubic feet on May 18 2018, 22% below the 5-year average.
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