Exxon Mobil Corp.'s agreement to buy XTO Energy Inc. for $31-billion (U.S.) is a bet that natural gas usage in the long-run will rise as a cleaner energy alternative to coal and heavy oil.
Natural gas is also receiving a boost with a draw down in natural gas storage. The price increased 3.7 per cent, up 19 cents to $5.35 per million British thermal units.
"With winter blanketing much of the northeast, UBS Securities Canada expects a large 140-150 billion cubic feet per day withdrawal next week," compared with the recent 64 bcf. withdrawal, said Andrew Potter, an energy analyst for UBS in a report to clients today.
"Gas withdrawal was larger than expected, but there's still a long way to go," he said. "Continued cold weather and further supply declines will be necessary to erode the current 573 bcf surplus over the five-year average," he said.
The S&P/TSX rally today is being led by natural producers Crew Energy Inc., EnCana Corp. Birchcliff Energy and NuVista.
The strength in capital markets was also in evidence this morning with Citigroup Inc.'s deal with the U.S. regulators under which it plans to repay $20-billion in Troubled Asset Relief Program.Report Typo/Error