Mother Nature has been the dominant force shaping Western Canadian natural gas fundamentals since late November, as a series of prolonged cold snaps drove temperatures well below seasonal norms across Alberta and British Columbia. The extended cold regime materially lifted heating demand, pushing Alberta intra-provincial consumption higher while maintaining strong export flows toward British Columbia, the U.S. Midwest, and LNG-linked corridor. Despite ample regional supply, these weather-driven demand pulls created pockets of tightness, with LNG Canada operating against a backdrop of firm, cold-supported fundamentals rather than supply scarcity.

That dynamic is now beginning to shift. Weather forecasts point to a clear inflection through the back half of January, with widespread below-normal temperatures giving way to above-normal warmth across Western Canada. Daily highs in Alberta have rebounded from single digits and teens during the coldest stretch to consistent 30s and 40s by Jan 20, sharply reducing heating demand. As temperatures normalize and then exceed seasonal averages, the winter risk premium begins to fade, easing pressure on storage and softening intra-Alberta demand.

Figure 1 |  AG2 Trader, Western Canada Temperature Forecast

Flow data reinforces that recent tightening was overwhelmingly demand-led. Production has remained stable, with NOVA receipts largely holding in the low-to-mid-14 Bcf/d range, signaling no material supply constraint. During the coldest periods, Alberta intra demand surged into the upper-7 to low-8 Bcf/d range, retreating toward 6.5 during this warm-up period. Export flows through AB/BC and Empress remained consistently strong throughout, while storage withdrawals accelerated into the 2.4–2.8 Bcf/d range. LNG feedgas added an additional layer of demand in early January, contributing meaningfully as winter-driven consumption peaked.

Figure 2 | Alberta Daily Demand and Supply Components

Storage trends capture the cumulative impact of this prolonged cold stretch. Inventories entered winter at historically elevated levels, but persistent withdrawals through late November and December significantly decreased that cushion, pulling stocks below year-ago levels by year-end. December 2025 exemplified a demand-driven balance: strong production was met by elevated intra-Alberta demand, firm exports, and LNG flows, forcing heavy reliance on storage. Looking ahead, warming temperatures should slow withdrawals and loosen the balance, but with much of the early-season buffer already drawn down, the market remains sensitive to any renewed cold risks later in the winter—even as inventories remain sufficient to support the system through the remainder of the season.

Figure 3 | AECO Storage Levels - Daily

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