Bloomberg News

Canada Natural Gas Rises as Heat in U.S. May Pares Supply Gains

May 01, 2012

Canadian natural gas rose amid forecasts for hotter-than-normal weather in the U.S. that would boost demand for gas-fired generation to run air conditioners, diverting the fuel from winter storage.

June gas in Alberta advanced 3.9 percent. U.S. stockpiles probably rose 26 billion cubic feet last week, the median of four analyst estimates compiled by Bloomberg. The five-year average increase is 79 billion, according to the Energy Department.

Degree days “witnessed a dramatic increase last week in the consuming east region,” Eric Bickel, a natural-gas analyst with Summit Energy Services in Louisville, Kentucky, said in a note today. Degree days are a measure of energy demand based on temperature. Bickel estimates stockpiles rose 34 billion cubic feet last week.

Alberta gas for June delivery rose 6.75 cents to C$1.81 a gigajoule ($1.75 per million British thermal units) as of 4 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 has declined 37 percent this year.

Natural gas for June delivery rose 8.6 cents, or 3.8 percent, to settle at $2.371 per million Btu on the New York Mercantile Exchange.

Spot Prices

Spot gas at the Alliance delivery point near Chicago jumped 19.29 cents, or 9 percent, to $2.3329 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 rose 13.88 cents, or 7.2 percent, to $2.0684 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices advanced 13.24 cents, or 6.5 percent, to $2.1653.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.5 billion cubic feet, 330 million below target.

Gas was flowing at a daily rate of 2.04 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 2.2 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 934 million cubic feet. The system was forecast to carry 1.72 billion cubic feet today, or 65 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 2.94 billion cubic feet at 3:05 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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