Bloomberg News

Canada Natural Gas Gains as U.S. Temperatures Forecast to Climb

April 27, 2012

Canadian natural gas rose amid speculation that warmer-than-normal U.S. weather will boost demand for gas-fueled electricity to power air conditioners.

Alberta gas advanced 3.9 percent. Highs in Chicago on May 3 may reach 78 degrees Fahrenheit (26 Celsius), 12 above normal, AccuWeather Inc. said. Demand for heat in the U.S. Midwest’s largest city will fall to zero May 1, signaling the start of cooling season, said David Salmon of Weather Derivatives.

“There’s a large swath of above-average temperature expectations that includes the Midwest,” said Eric Bickel, a natural-gas analyst with Summit Energy Services in Louisville, Kentucky. The Midwest is the primary market for Canadian gas.

Alberta gas for May delivery rose 6 cents to C$1.62 a gigajoule ($1.55 per million British thermal units) as of 3:40 p.m. New York time on NGX, a Canadian Internet market. June gas gained 7.25 cents, or 4.5 percent, to C$1.68 per gigajoule.

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 up 12 percent this week.

Natural gas for June delivery became the front month on the New York Mercantile Exchange today. The futures rose 6 cents, or 2.8 percent, to settle at $2.186 per million Btu for the first weekly gain since mid-March.

Spot Prices

Gas for prompt delivery slipped in anticipation of lower weekend demand. Spot gas at the Alliance delivery point near Chicago fell 6.78 cents, or 3.1 percent, to $2.1513 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 fell 6.92 cents, or 3.6 percent, to $1.8662 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices declined 7.08 cents, or 3.5 percent, to $1.9377.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.3 billion cubic feet, 521 million below target.

Gas was flowing at a daily rate of 2.06 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 2.19 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 999 million cubic feet. The system was forecast to carry 1.65 billion cubic feet today, or 62 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 3.04 billion cubic feet at 2:35 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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