Deloitte Canada Predicts Lower Natural Gas Prices for 2023, Stable Oil Prices

Deloitte Canada's Resource Evaluation and Advisory (REA) group forecasts that North American natural gas prices, which experienced a significant decline during Q1 2023, will remain low throughout the year. High storage levels and increased production in both Canada and the United States have resulted in an oversupply, causing an imbalance between supply and demand and putting downward pressure on prices.

According to Andrew Botterill, national Oil, Gas and Chemicals leader at Deloitte Canada, many European countries increased their natural gas storage levels in anticipation of a harsh winter, but milder weather left them with higher-than-normal supplies. He added that the North American market is also oversupplied, which means a return to the elevated price levels seen in 2022 is unlikely.

In contrast, oil prices stabilized in Q1 2023 and are expected to remain stable through the spring. This is due to increased demand from China, which has reopened its economy following several COVID-19 lockdowns, and steady production by OPEC countries. The forecast also highlights significant price growth for Western Canada Select (WCS) as the differential with West Texas Intermediate (WTI) has narrowed.