Bloomberg News

Canadian Natural Gas Declines as Low Demand Boosts Inventories

April 11, 2012

Canadian natural gas fell as milder-than-normal weather across the U.S. cut demand and boosted an inventory surplus.

Alberta gas declined 2.9 percent. Stockpiles in the U.S. probably gained 21 billion cubic feet in the week ended April 6, based on the median of 21 analyst estimates compiled by Bloomberg (DOENUSCH). Supplies were 61 percent above the five-year average as of March 30, according to the Energy Department (DOENUST5), which is scheduled to releases its weekly gas report tomorrow.

“The expectations for tomorrow are driving some of the uncertainty in today’s trading,” said Eric Bickel, a natural gas analyst with Summit Energy Services in Louisville, Kentucky.

Alberta gas for May delivery dropped 4.75 cents to C$1.57 a gigajoule ($1.48 per million British thermal units) as of 2:45 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. (TRP)’s Alberta system. NGX gas is down 45 percent this year.

Natural gas for May delivery on the New York Mercantile Exchange fell 4.7 cents to settle at $1.984 per million Btu, closing below $2 for the first time since January 2002.

Spot gas at the Alliance delivery point near Chicago declined 4 cents, or 2 percent, to $1.9616 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.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas slid 6.41 cents, or 3.4 percent, to $1.846 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices dropped 2.72 cents to $1.9443.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 15.8 billion cubic feet, 968 million below target.

Gas was flowing at a daily rate of 2.05 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 2.18 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.18 billion cubic feet. The system was forecast to carry 1.47 billion cubic feet today, or 55 percent of its capacity of 2.65 billion. 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 3.1 billion cubic feet at 1:50 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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