Current prices on the New York Mercantile Exchange are about 14 per cent above the level of a year ago, closing on Friday at $4.43 (U.S.) per million British thermal units. The 12-month strip price, at $4.52, does not reflect the large increase in demand that will result from the need to rebuild stockpiles by next winter.

“Delusional and naive is the way that I would characterize the forward curve right now,” said FirstEnergy Capital Corp. analyst Martin King. “It just seems to be sunshine, butterflies, puppies, kitties: ‘We’re going to grow our way out of this problem, don’t worry.’ I don’t think that’s going to be the case.”

Sustained prices at today’s levels or higher are required for power generators to reduce demand by switching to coal, allowing some of that gas supply to be redirected to storage, he said. Today’s markets are still not strong enough to lead producers to crank up dry-gas drilling following a years-long slump.

Energy companies were beneficiaries of a dramatic turnaround in the market as bone-chilling weather from Alberta to Ontario to New York sparked a surge in demand that drained inventories to levels well below the average of the past half decade.

Homeowners are paying the price in the form of higher bills after wholesale gas in Alberta surged into the double-digit dollar figures during some of the coldest days.

Following the end of the industry’s heating season on March 31, Mr. King raised his 2014 forecast for Alberta gas to $5.20 Canadian per gigajoule – the equivalent of $4.94 (U.S.) per million British thermal units – from $3.92 Canadian per GJ. Besides the rebuilding inventories, the industry must feed an small increase in domestic demand and boost exports to the United States.

Last week, the U.S. Energy Information Administration reported inventories totalled 822 billion cubic feet, which was 51.6 per cent below the level of 12 months earlier, and 54.7 per cent under the five-year-average.

Canadian inventories ended the season at 188.2 billion cubic feet, less than half the remaining volume in April 2013, according to FirstEnergy. Overall Canadian gas supply in March was 14.1 billion cubic feet a day, up just 3.3 per cent on the year.

“For both Canadian storage and U.S. storage, the injection season has begun with a big deficit in the level of working gas in storage,” said Judith Dwarkin, director of energy research at ITG Investment Research. “It’s interesting – the current NYMEX strip indicates the market is fairly unconcerned with the gargantuan level of injections required to replenish the cupboard by the start of next winter.”

Ms. Dwarkin projects U.S. gas production to increase by 2.5 per cent this year, and storage volumes to end the injection season as high as 3.3 trillion cubic feet, well under the five-year average of 3.8 trillion for the start of November.

“This is assuming normal summer weather. Hotter summer weather would make that refill even more challenged,” she said.