Bloomberg News

Canada Natural Gas Gains Amid Cooler Weather in U.S. Northeast

January 04, 2012

Jan. 3 (Bloomberg) -- Canadian natural gas rose, reversing an earlier decline, as cooler-than-normal weather in the U.S. Northeast boosts demand for heating fuels.

Alberta gas rose 0.9 percent after forecasters including Weather Derivatives predicted below-normal temperatures in the Northeast. Heating demand in New York will be 24 percent above normal tomorrow, Weather Derivatives said. Milder weather later in the week may cause prices to drop, said Gordy Elliott, a risk management specialist at FC Stone LLC.

“There’s an overabundance of supply,” said Elliot, who is based in St. Louis Park, Minnesota. “We’re seeing some pressure put on prices here.”

Alberta gas for February delivery rose 2.25 cents to C$2.65 a gigajoule ($2.48 per million British thermal units) at 1:25 p.m. New York time on 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.

Gas for February delivery rose 0.4 cent to settle at $2.993 per million Btu on the New York Mercantile Exchange.

Spot gas at the Alliance delivery point near Chicago slipped 1.1 cents to $3.0399 per million Btu on the Intercontinental Exchange. Alliance, an express line, can carry 1.5 billion cubic feet a day to the Midwest from western Canada.

At the Kingsgate point on the border of Idaho and British Columbia, gas gained 2.42 cents to $2.9003, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 0.74 cent to $2.975.

Flow Rates

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.5 billion cubic feet, 256 million below target.

Gas was flowing at a daily rate of 3.51 billion cubic feet at Empress, Alberta. The fuel is transferred to TransCanada’s main line at Empress.

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 2.07 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 924 million cubic feet. The system was forecast to carry 1.73 billion cubic feet today, or 65 percent of its capacity of 2.65 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 2.63 billion cubic feet at 2:35 p.m.

--Editors: Bill Banker, David Marino

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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