Bloomberg News

Canadian Natural Gas Declines as Mild Weather Forecast for U.S.

November 29, 2011

Nov. 28 (Bloomberg) -- Canadian natural gas fell amid forecasts that mild weather in the U.S. will pare the need for imported fuels.

Alberta gas fell 5.5 percent after forecasters including Weather Derivatives predicted warmer-than-normal weather across the U.S., where most of Canada’s gas output is consumed. Heating demand will trail normal by 9 percent through Dec. 5, the Belton, Missouri-based forecaster said.

“The weather forecasts just aren’t that scary for the lower 48 states,” said Kyle Cooper, director of research at IAF Advisors in Houston. “Withdrawals from storage may not start until the week ending Dec. 9.”

Alberta gas for December delivery dropped 16.75 cents to C$3.08 per gigajoule ($2.82 per million British thermal units) as of 2:35 p.m. New York time, according to NGX, a Canadian Internet market. Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp.’s Alberta system. January gas on NGX fell 16.25 cents to C$3.155.

Gas for December delivery on the New York Mercantile Exchange fell 17.8 cents, or 5 percent, settle at to $3.364 per million Btu. The contract expired at the close of trading. The futures have tumbled 24 percent this year. January gas fell 14 cents to $3.525.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was at 16.5 billion cubic feet, 72 million below its target.

Gas was flowing at a daily rate of 2.14 billion cubic feet at Empress, Alberta, where the fuel is transferred to TransCanada’s main line.

Flow Rate

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 1.97 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.25 billion cubic feet. The system was forecast to carry 1.47 billion cubic feet today, about 54 percent of its capacity of 2.74 billion.

The volume on Spectra Energy’s British Columbia system, which gathers the fuel in northeastern British Columbia for delivery to Vancouver and the Pacific Northwest, totaled 2.97 billion cubic feet at 1:20 p.m.

--Editors: Richard Stubbe, Bill Banker

To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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