Canadian Energy Outlook Worsens as Natural Gas Prices Collapse
By Energy outlook in Canada darkens as natural gas prices collapse.[0] The outlook for energy in Canada has taken a turn for the worse as natural gas prices have plummeted in recent months.[1] Since late November alone, the price has dropped by some 65 per cent and is now nearly one-fourth what it was at last year’s peak.[2] The biggest reason for the dim outlook is falling gas prices, which have hit Canadian oil and gas companies particularly hard. This year, natural gas prices have decreased by one third, and are 75% lower than their high in 2022. This is due to an unusually hot winter and autumn, which has caused a decrease in demand.[3] Natural gas prices have dropped below year-ago levels prior to Russia's invasion of Ukraine.[3]
At the start of the week, natural gas futures began to decline after having been up for the last three sessions, likely because the weather is predicted to become warmer in the near future.[4] As production levels approach their peak and storage reserves expected to increase in the upcoming weeks, futures contracts have stabilized.[4] On Monday, March gas futures on Nymex were priced at $2.405 per million British thermal units, a decrease of 10.9 cents from the previous close. April futures were also down, with a 10.8 cent decrease to $2.499.[5]
Analysts are reducing their projections for companies located in Canada's oil sector, a sector that was predicted to remain unscathed by a severe plunge in earnings. This shift is evident from Wall Street to Bay Street.[6] Gillian Wolff, a senior associate analyst at Bloomberg Intelligence, and Gina Martin Adams, the chief equity strategist, asserted in a Tuesday report that energy sectors around the world are anticipated to decrease in 2023, due to a challenging comparison with 2022; however, it was foreseen that Canada would endure the least harm by the end of November.[3] It is anticipated that Canada will experience an even greater decrease in comparison to the U.S. and Europe, while energy sectors in developing countries will be the top earners in 2023.[3]
A gloomy outlook reflects the sharp decline in natural gas prices that has greatly impacted Canadian energy firms. Given the limited number of days of frigid temperatures expected in the next fortnight, investors will likely search for signs that might indicate whether the overall market environment is becoming more stringent.[4] Inventories reported by the government recently have suggested some constriction, but reduced production and energy produced from renewable sources have also contributed.[4]
0. “Energy Bulls Fall Out of Love with Natural Gas. But Are Prices Planning to Win Them Back?” Elliott Wave International, 15 Feb. 2023, https://www.elliottwave.com/Energy/Energy-Bulls-Fall-Out-of-Love-with-Natural-Gas-But-Are-Prices-Planning-to-Win-Them-Back
1. “Natural Gas Price Setup: Is it Beginning to Build a Base?” DailyFX, 14 Feb. 2023, https://www.dailyfx.com/analysis/natural-gas-price-setup-is-it-beginning-to-build-a-base-20230214.html
2. “Energy outlook in Canada darkens as natural gas prices collapse” Financial Post, 14 Feb. 2023, https://financialpost.com/commodities/energy/oil-gas/canada-energy-outlook-sours-natural-gas-prices-collapse
3. “Drop In Gas Prices Weighs On Outlook For Canadian Drillers” OilPrice.com, 15 Feb. 2023, https://oilprice.com/Energy/Energy-General/Drop-In-Gas-Prices-Weighs-On-Outlook-For-Canadian-Drillers.html
4. “Natural Gas Technical Analysis: The Price Is Preparing To Br” MENAFN.COM, 15 Feb. 2023, https://menafn.com/1105577900/Natural-Gas-Technical-Analysis-The-Price-Is-Preparing-To-Br
5. “Natural Gas Technical Analysis: The Price is Range Bound” DailyForex.com, 13 Feb. 2023, https://www.dailyforex.com/forex-technical-analysis/2023/02/natural-gas-technical-analysis-13-january-2023/191366
6. “Analysts Are Slashing the Outlooks for Companies in One Corner of the Global Oil Patch … – Latest Tweet” LatestLY, 14 Feb. 2023, https://www.latestly.com/socially/business/analysts-are-slashing-the-outlooks-for-companies-in-one-corner-of-the-global-oil-patch-latest-tweet-by-bloomberg-4842635.html
