Energy markets adjust to economic uncertainty while North American supply stays strong

CALGARY, Nov. 17, 2011 /CNW/ - Despite uncertainty in energy pricing, Canadians can warm up to adequate energy market supplies this winter, the National Energy Board (NEB or Board) said in its latest Winter Outlook.

The world economic outlook is the primary uncertainty for energy prices this winter. Sovereign debt concerns in Europe and the United States, coupled with lower expectations for global economic growth present significant market challenges.

Weather could have a significant impact on prices this winter, with colder than normal conditions predicted in most of Canada. If these predictions are correct, there will be a higher demand for heating oil, natural gas, and electricity.

Geopolitical instability in Libya, Iran and the Middle East in general is creating energy supply concerns. However, North America's energy markets are generally well-supplied.

Crude oil prices are expected to average between US $85 and $95 per barrel. World oil markets are currently tight, with total commercial petroleum products and crude oil stocks in the three major markets of Japan, the United States and Europe near five-year lows. After geopolitical unrest drove oil prices to a post-recession high last spring, growing concern over the global economy has had a moderating effect. Seasonal demand growth may counterbalance those effects through the winter period.

With the price of home heating oil closely tracking the price of crude oil, average home heating prices this winter are expected to rise slightly, averaging between $1.00 and $1.20 per litre. U.S. distillate inventories are above the five-year average, indicating that markets will be well-supplied as winter begins.

Steady natural gas production levels in North America are meeting slight increases in demand, keeping natural gas prices consistent with last year's, at an average of $3.75 to $4.25 per MMBtu this winter. The potential for cold weather to disrupt gas supply remains an upward price pressure, as does increased demand in industrial use and electricity generation.

Canadians can expect electricity prices to be slightly higher than average this winter. Domestic electricity markets have adequate supply, and exports are at a multi-year-high, thanks in part to higher than normal precipitation levels across Canada this year, which heightened hydroelectric production. The prices in the two Canadian wholesale markets are expected to settle at significantly different levels. Alberta's market is tight, with power demand increasing from the oil sands, expanding population base and economic activity. Ontario's demand has declined in 2011, with slightly slower-than-expected economic growth.

The NEB is an independent federal regulator of several parts of Canada's energy industry. Its purpose is to regulate pipelines, energy development and trade in the Canadian public interest. As part of its mandate, the NEB monitors the supply of all energy commodities in Canada and reports its findings. The NEB Internet site is regularly updated with new energy information for the Canadian public.

This news release is available on the NEB's Internet site at www.neb-one.gc.ca under What's New!

SOURCE National Energy Board

For further information:

Stacey Squires (Stacey.squires@neb-one.gc.ca)
Communications Officer
Telephone: 403-221-3294
TTY (teletype): 1-800-632-1663


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