Bloomberg News

Canadian Natural Gas Extends Decline as Mild Weather Cuts Demand

February 01, 2012

Jan. 31 (Bloomberg) -- Canadian natural gas fell, extending its decline this month to 29 percent, as mild weather across the U.S. pared demand for home-heating fuels.

Alberta gas fell 8.7 percent. Demand for heat in the U.S. Midwest, the biggest market for Canada’s gas, will trail normal by 29 percent through Feb. 7, according to Weather Derivatives. It will be the 14th consecutive week of below-normal demand, the Belton, Missouri-based forecaster said.

“At these temperatures we’re not anticipating much demand,” said Gordy Elliott, a risk-management specialist at INTL FC Stone LLC in St. Louis Park, Minnesota.

Alberta gas for March delivery fell 19.25 cents to C$2.025 a gigajoule ($1.91 per million British thermal units) at 3:05 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.

Natural gas for March delivery on the New York Mercantile Exchange fell 21 cents, or 7.7 percent, to settle at $2.503 per million Btu. The futures dropped 16 percent this month, the largest January decline in three years.

Spot gas at the Alliance delivery point near Chicago dropped 21.79 cents, or 7.7 percent, to $2.6181 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.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas tumbled 19.68 cents, or 7.5 percent, to $2.446, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 17.86 cents, or 6.6 percent, to $2.5449.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.6 billion cubic feet, 179 million below target.

Gas was flowing at a daily rate of 2.68 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 2.11 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 573 million cubic feet. The system was forecast to carry 1.87 billion cubic feet today, or 77 percent of its capacity of 2.44 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 2.88 billion cubic feet at 2:05 p.m.

--Editors: Charlotte Porter, 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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