This shows natural gas futures prices in Canadian $/GJ and ¢/m3. Historical prices courtesy of Enerdata Ltd. The forecast is created for educational purposes and considers analyst opinion, weather, oil prices, gas storage, drilling rates and economic indicators.

What's going on with natural gas prices ? It's been wild. Gas prices followed oil prices up last summer, then the hurricanes hit. That shut down significant natural gas and oil production and storage facilities around New Orleans, and some are still shut. Short term prices spiked. Longer term prices have been gradually increasing for about a year now. Then we had an incredibly warm winter, and short term prices went way down. There is more natural gas in storage than ever before at this time of the year. But, while that has brought short term prices prices Long term fundamentals suggest that prices will stay high, and gradually increase.

April 2006. Go long on energy, CIBC says
Summary: “CIBC attributed its increasingly bullish energy and material position on expectations that another active hurricane season will hamper capacity rates and production in the Gulf of Mexico, which is still recovering from 2005's destructive storms. The rate at which wells are shut down could double from its current 25-per-cent level and send crude oil prices above $70 (U.S.) a barrel in the second half of the year, CIBC said, driving energy sector returns to around 40 per cent.”

Forecasts suggest that natural gas prices will track the trend line shown above.

• Lower production from new gas wells and depletion of older wells.
• New electricity generation has, and continues to be, gas fired.
• The long term price trend is up due to fundamentals. Supply is flat and demand is up.
• Economic outlook is improving and this will increase energy consumption.

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