Actionable news
All posts from Actionable news
Actionable news in PEIX: Pacific Ethanol, Inc.,

What Is Going On With AECO Gas Prices? - Natural Gas Daily


AECO plunged below C$1/Mcf yesterday.

AECO basis differential is now above C$2.50/Mcf.

We think the recent price weakness is temporary.

Over the last several days, we got a lot of request asking what exactly is going on with Canadian gas prices (AECO). In this NGD, we will talk about what we think will happen to AECO gas moving forward and when we expect the price to revert.

Here's the most updated natural gas (NYSEARCA:UNG) prices, so take a look at this first:

AECO hasn't been exactly itself over the last several days.

AECO hasn't been exactly itself over the last several days.

Prices have now fallen below C$1/Mcf, and the AECO basis differential has now spiked above C$2.50/Mcf. On May 11th, we wrote a piece called "Canadian Gas Edition." In it, we talked about how low AECO gas prices will likely revert, and a potential La Nina winter will result in significantly colder winter for Canada.

What we saw was a sharp rebound in AECO prices since May, and at one point in time, AECO basis differential hit the $0.75/Mcf mark that we said was the transportation cost. Since the basis differential narrowed, AECO has tanked once again leaving many of our readers wondering what exactly is going on.

Natural gas is an interesting commodity. Storage surplus and deficit are the holy grail to natural gas prices. If storage is expected to hit full capacity, prices could even go negative at some point. This is precisely what's happening in Canada. Western Canada storage is 94.6% full, and there are still 11-12...