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The number of active natural gas rigs stood at 63 in January, compared to 207 during the same month in 2015, according to The Canadian Association of Oilwell Drilling Contractors.

FirstEnergy, a Calgary-based energy investment broker, says “insane” record high natural gas storage increased to levels not seen since 1998.

“There is an outside chance that the net cumulative withdrawal of gas from Alberta storage could be close to zero this heating season, an unprecedented event in the history of North American natural gas storage,” King said in a note to clients.

On Wednesday, Dundee Capital Markets cut its AECO forecast by 25 per cent this year to $1.80 per mcf.

Canadian natural gas prices are falling in tandem with U.S. Henry Hub benchmark that is at levels last seen in the previous century. The U.S. benchmark was trading at US$1.68 per mcf on Wednesday.

“While we remain constructive in the medium term due to increased North American industrial gas demand, growing Mexican exports and U.S. LNG offtake, the short-term storage overhang is expected to keep prices depressed until the heating season resumes or production tapers,” Dundee analysts wrote in a note to clients.

The first U.S. liquefied natural gas export ship set sail last month, but it will not be enough to absorb a record 2.4 trillion cubic feet of natural gas storage — 50 per cent higher than its five-year average.

As North American natural gas producers mothball gas rigs, production across the continent could fall by eight billion cubic feet per day this year, National Bank Financial estimates.

“Current fundamentals are not likely sustainable and we have visibility towards potential for a material re-set of supply/demand and pricing over the next six to 12 months,” said Brian Milne, analyst at National Bank.



yhussain@nationalpost.com

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