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Energy Market Overview - May 2014

By Margaret Harrison

The long, cold winter just finished has had a dramatic impact on natural gas storage (Inventory) levels. These low storage levels will result in Utilities buying 50% more gas in the summer than they usually would, in order to have enough gas on hand to serve their customers next winter. As a result, natural gas prices are trending higher than we have seen over the past couple of years. We are forecasting this will increase demand by 5.5 – 6.25% (4-5 Bcf per day).

While power prices in Ontario are fairly aligned with natural gas prices, we have seen a mild softening in the electricity market prices due to the reduced spring demand and an increase in the hydro powered generation (greater than usual snow levels result in larger flows of melting snow).

Overall we will see higher prices for both natural gas and electricity this year versus the previous two years.

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