Bloomberg News

Canadian Natural Gas Declines as Warm Weather Pares Furnace Use

March 27, 2012

Canadian natural gas fell, tracking a decline in New York futures, as warmer-than-normal U.S. weather pared furnace use and allowed stockpiles to grow.

Alberta gas declined 3 percent. Demand for heat across the U.S. will trail normal by 38 percent through April 3, according to Weather Derivatives. The warmest winter since 2000 allowed stockpiles of the fuel to climb to 54 percent above the five- year average as of March 16, according to the Energy Department (DOENUST5).

“There’s little demand to be seen,” said Eric Bickel, a natural gas analyst at Summit Energy Services in Louisville, Kentucky. “There will be downward pressure on gas prices until we see cooling demand coming in.”

Alberta gas for April delivery fell 5.25 cents to $1.68 a gigajoule ($1.60 per million British thermal units) as of 3:15 p.m. New York time on NGX, a Canadian Internet market. NGX gas is down 41 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. NGX gas touched C$1.625 a gigajoule March 8, the lowest for the April near-month contract since it started trading in 2000.

Natural gas for April delivery on the New York Mercantile Exchange fell 1.8 cents to settle at $2.208 per million Btu after dropping to $2.176, the lowest intraday price since February 2002.

Spot Prices

Spot gas at the Alliance delivery point near Chicago declined 7.23 cents, or 3.4 percent, to $2.068 per million Btu on the Intercontinental Exchange.

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

At the Kingsgate point on the border of Idaho and British Columbia, gas dropped 14.3 cents, or 7.1 percent, to $1.8726 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, gas fell 15.69 cents, or 7.3 percent, to $1.9866.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 17.3 billion cubic feet, 479 million above target.

Gas was flowing at a daily rate of 2.03 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 2.21 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.08 billion cubic feet. The system was forecast to carry 1.58 billion cubic feet today, or 59 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 2.98 billion cubic feet at 2:05 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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