Change in prices over the last few months
Fall 2018 was characterized by strong production growth and low storage levels. In addition, the temperatures in November 2018 were below seasonal averages. Given this situation, natural gas prices reached high thresholds for November, so much so that November 2018 even qualified as the coldest November in 30 years. As you can see in the first graph below, at the highest point in the month, the natural gas spot price at Dawn hit $6.29/GJ, well above the highest price in November 2017 ($4.08/GJ). In the second graph, you can also see the intensity of the temperatures in November, i.e., more than 423 heating degree days, compared with the average of 335 in the past five years.
Storage levels at the beginning of winter 2018–2019 were well below those recorded at the beginning of the previous winter. For example, as at November 2, 2018, storage levels in the United States and in Canada only represented 84.6% and 86.1%, respectively, of the storage levels recorded at the beginning of November 2017.
However, with the return of above-normal temperatures in December, gas withdrawals from storage sites were lower than those recorded in November 2017. This allowed for a return to almost normal temperatures, with storage levels today being very close to the storage levels at the beginning of January 2018. In Eastern Canada, the natural gas storage level is even 19.9% higher than what it was last year.
For the rest of winter 2018–2019, the financial market was showing a Dawn spot price of $3.44/GJ on January 11, 2019. On this same date, the futures for February were at around $3.88/GJ. But, as always, it is the actual temperatures that will ultimately determine the path that prices will be taking over the coming months.
During calls for tenders for purchases contracted in advance at Dawn, Parkway and Empress, Énergir makes sure that it maintains a diversity of suppliers and contract terms. Purchases at Empress are based on an index that represents market conditions in Alberta, while the purchasing strategy at Dawn is as follows: purchases in advance are based 50% to 75% on the NYMEX index, and the rest are based on the NGX Dawn index.
Spot Market Purchases
As mentioned, Énergir is active on the spot market and regularly transacts at different points of purchase. In terms of its operating needs, Énergir makes its spot purchases at Dawn or Parkway, in addition to using the inventories available at Enbridge Gas Inc. (formerly Union Gas) in order to meet variations in customer consumption. Énergir takes market conditions into account in its purchasing strategy and it can adjust this strategy as needed, in the best interests of its customers.
The price of emission units on the market has been on an upward trajectory over the past three months, increasing from US$15.42 on October 10 to US$15.62 on January 11 (+1.3%). The gradual rise in prices can be explained mainly by the anticipated increase in the auction floor price starting on January 1, 2019.
During the November 14, 2018 auction, the final selling price of current vintage emission units was set at US$15.31 (CAN$20.27), while that of future vintage emission units was set at US$15.33 (CAN$20.30). The selling prices were relatively in line with the consensus among analysts, and so the market did not experience any particular volatility when the results of the auction were made public.
To help you improve your energy efficiency and reduce your annual energy consumption, Énergir will give you a grant when you recommission the mechanical systems in your building. As listed below, the many advantages of this program have motivated customers such as Groupe Petra to participate in this type of project:
For further information, please communicate with your representative or visit the program’s web page.