Bloomberg News

Canadian Natural Gas Declines on Cooler June Forecast

May 25, 2012

Canadian natural gas fell for a second day on forecasts of moderate temperatures that may limit demand for the fuel from plants that power air conditioners.

June gas in Alberta declined 4.6 percent as MDA EarthSat Weather in Gaithersburg, Maryland, predicted a cooling trend in the eastern half of the U.S and Canada from May 30 to June 3. Temperatures in Washington, D.C., may be 72 degrees Fahrenheit (22 Celsius) on June 3, 9 below normal, while Houston may see 81 degrees, compared with a usual 89, according to AccuWeather Inc. in State College, Pennsylvania.

“While not extreme, this cooler air mass will be the first in a long while to reach these areas, doing more to limit cooling demand rather than drive heating demand,” MDA EarthSat meteorologist Travis Hartman said in a note to clients.

Alberta gas for June delivery dropped 10 cents to C$2.0725 a gigajoule ($1.90 per million British thermal units) on NGX, a Canadian internet market, at 3:35 p.m. New York time. Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp. (TRP)’s Alberta system.

Gas on NGX had gained 28 percent this month through yesterday. A settlement below C$2.11 today would mean the first weekly decline since April.

Gas for June delivery on the New York Mercantile Exchange fell 7.9 cents to settle at $2.568 per million Btu.

Spot Gas

Spot gas at the Alliance delivery point near Chicago slid 12.32 cents, or 4.6 percent, to $2.5527 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 plummeted 21.11 cents, or 8.5 percent, to $2.2816 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices dropped 18.09 cents, or 7 percent, to $2.3882.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s natural gas wells, was at 16.9 billion cubic feet at 3:30 p.m.

Gas was flowing at a daily rate of 1.87 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 1.94 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 858 million cubic feet. The system was forecast to carry 1.51 billion cubic feet today, or 64 percent of its capacity of 2.37 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 2.8 billion cubic feet at 2:35 p.m.

To contact the reporter on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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