Heading into the peak winter heating season, underground propane inventories in Canada sit well below their typical seasonal levels while natural gas storage has reached record highs. This is according to a new market snapshot released by the Canada Energy Regulator this week.
At the beginning of November, total nationwide propane storage stood at 1,561 thousand cubic metres, 19.7 per cent below the five-year average and just 1.6 per cent under the five-year minimum.
The regional picture is similarly tight. In western Canada, storage reached about 6.46 million barrels — a figure 12.6 per cent below the five-year average, though 2.4 per cent above the five-year minimum. In Ontario, propane stocks stood at roughly 3.36 million barrels, 30.6 per cent below the provincial five-year average despite being 7.4 per cent above the minimum threshold.
In stark contrast, Canada’s natural gas storage is robust. As of 1 November 2025, total gas inventory reached about 1,099 billion cubic feet (Bcf), marking 2.0 per cent above the five-year maximum. In western Canada, storage reached 760 Bcf, 3.9 per cent above the historical high; in eastern Canada, stocks were 339 Bcf, just 0.6 per cent below the five-year average.
Seasonal dynamics, production, and export shifts
The divergent trajectories for propane and natural gas reflect different underlying market dynamics. For natural gas, persistently strong production — particularly from liquids-rich formations like the Montney in British Columbia and Alberta — continues to bolster supply. At the same time, slower-than-expected export volumes from new liquefied natural gas (LNG) capacity, mild summer and early-autumn weather, and pipeline constraints have contributed to elevated storage levels.
Conversely, propane — a byproduct of natural gas processing — has faced tightening supply relative to demand. While overall production remains broadly stable, elevated exports from British Columbia and overland shipments to U.S. and Mexican markets have drained inventories. This has reduced the buffer of stored propane heading into winter, increasing the risk of tightness if demand spikes.
Winter demand, weather uncertainty, and risk factors
Propane and natural gas are both widely used for heating and other uses during Canada’s winter, making inventory levels critical. The CER notes that demand surge from cold weather — or unexpected swings in temperature — could rapidly draw down propane (and in some regions, gas) inventories, potentially tightening supply and pushing up prices.
The 2025 winter outlook adds further uncertainty. Forecasts from Environment and Climate Change Canada (ECCC) suggest a higher probability of warmer-than-average conditions for November through January, which may temper heating-fuel demand. In contrast, the U.S. National Oceanic and Atmospheric Administration (NOAA) projects a cooler-than-normal winter linked to La Niña patterns — a development that could boost heating demand across much of North America.
If colder weather prevails, propane markets in particular could come under pressure given already low inventories. For natural gas, the ample storage offers greater buffer, but demand surges could still strain regional distribution systems if withdrawals accelerate sharply.
Implications for supply, exports and pricing
The contrasting storage positions for propane and natural gas may have ripple effects on Canadian energy markets. For natural gas, strong storage — paired with record production — enhances Canada’s competitive position for domestic demand, exports, and upcoming LNG export commitments. It also offers a cushion against price volatility, especially if winter demand remains moderate or exports ramp up gradually.
But for propane, the tight inventory picture increases vulnerability. If demand surges this winter — whether for heating, agricultural use, or exports — supply could become constrained. That may lead to higher wholesale or retail prices, particularly in regions heavily reliant on stored propane for winter heating.
Export markets could also feel the pressure: with tighter domestic supply, Canada may find it harder to meet external demand for propane, prompting reprioritization toward domestic needs or increased imports.
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