Bloomberg News

Canadian Natural Gas Declines on Warmer-Than-Normal U.S. Weather

March 26, 2012

Canadian natural gas fell as warmer-than-normal weather in the U.S. pared demand for imports of furnace fuel.

Alberta gas declined 3.7 percent. Demand for heat across the U.S. will trail normal by 35 percent through March 30, according to forecaster Weather Derivatives. Chicago’s high tomorrow may be 68 degrees Fahrenheit (20 Celsius), 17 above normal, State College, Pennsylvania-based AccuWeather Inc. said.

“Canadian imports have been well below year-ago levels through mid-March,” said Stephen Smith, an energy analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi. “Unusually mild weather since November has been a major factor.”

Alberta gas for April delivery fell 6.75 cents to $1.74 a gigajoule ($1.66 per million British thermal units) as of 2:35 p.m. New York time on NGX, a Canadian Internet market. NGX gas is down 39 percent this year.

Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp. (TRP)’s Alberta system.

Natural gas for April delivery on the New York Mercantile Exchange fell 4.9 cents, or 2.2 percent, to settle at $2.226 per million Btu.

Spot gas at the Alliance delivery point near Chicago advanced 14.9 cents, or 7.5 percent, to $2.1403 per million Btu on the Intercontinental Exchange. Warmer-than-normal weather and reduced nuclear power-plant output in the coming week are expected to boost immediate demand for gas to fire generators.

Alliance is an express line that can carry 1.5 billion cubic feet a day from western Canada.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas declined 0.97 cent to $2.0156 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, gas rose 5.88 cents, or 2.8 percent, to $2.1435.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 17.2 billion cubic feet, 422 million above target.

Gas was flowing at a daily rate of 1.9 billion cubic feet at Empress, Alberta, where the fuel is transferred to TransCanada’s main line.

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 2.15 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.27 billion cubic feet. The system was forecast to carry 1.38 billion cubic feet today, or 52 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 3.03 billion cubic feet at 1:35 p.m.

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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