AECO prices hover near five-month lows despite Western Canada’s LNG export growth

While Canada’s liquefied natural gas (LNG) ambitions are ramping up, the reality for Western Canada’s natural gas benchmark AECO is one of persistent low prices and a challenging market environment. According to recent reporting from Natural Gas Intelligence, AECO forward prices for May have dipped to just $1.37/GJ, marking a five-month low, even as LNG Canada moves ahead with expanded export operations.

The Forward Outlook:

• May Forecast: $1.37/GJ (as of May 6, 2026)
• Summer Forecast: $1.35/GJ
• Next Winter Forecast: Rising to $2.65/GJ

Despite these forward prices, the Canadian natural gas market finds itself in a bind: LNG Canada’s second train is now online, increasing export capacity, but this positive is being overshadowed by a flood of domestic supply.

Why aren’t prices rising with LNG export growth?

In a nutshell: Local production is outpacing infrastructure capacity.

• Massive drilling activity: Canadian oil and gas formations are witnessing record drilling, leading to unprecedented levels of associated gas production.
• Storage and pipe constraints: Even as LNG export terminals gear up, Canada’s gas takeaway infrastructure cannot currently keep pace with production, trapping gas in the region.
• Domestic oversupply: Spot AECO prices have dropped by more than $1.20 year-on-year as the market remains awash in supply.

The price gap & regional pressures

• Deep discounts continue: AECO remains priced at a steep discount versus the U.S. Henry Hub. Forward basis prices are persistently under pressure.
• Weakness in key markets: Regional demand has softened in downstream markets—like Chicago and the U.S. Pacific Northwest—further capping any upside for Canadian prices.

What can market participants expect next?

While “LNG relief” is on the horizon, providing a potential avenue for increased Canadian gas exports, meaningful price recovery will depend on a better balance between supply growth and infrastructure capacity. Until new pipelines or further export facilities catch up to surging production, AECO prices are likely to remain constrained.

In summary

Despite the forward progress in LNG exports, Western Canada’s AECO price story this spring is one of stubborn oversupply. With production racing ahead of infrastructure, the true upside for Canadian gas will only be realized once pipelines and export channels catch up with the pace of drilling. Until then, expect continued price volatility and keen attention to market developments.

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