Bloomberg News

Canadian Natural Gas Slips on Cooler-Than-Normal Weather Outlook

May 29, 2012

Canadian natural gas fell on forecasts that the northern U.S. will have cooler-than-normal weather, cutting air-conditioner use in the biggest consuming region for the nation’s gas exports.

June gas in Alberta slid 6.6 percent. Cooling demand in the U.S. Midwest will trail normal by 28 percent through June 5, according to Belton, Missouri-based Weather Derivatives. Chicago may have a high May 31 of 61 degrees Fahrenheit (16 Celsius), 14 lower than normal, AccuWeather Inc. said.

“The forecasts have shifted to cooler,” said Martin King, an analyst with FirstEnergy Capital Corp., in Calgary. “There’s a sense of caution now about coal-to-gas switching and how that might have been jeopardized by the recent price runs.”

Alberta gas for June delivery dropped 13.75 cents to C$1.945 a gigajoule ($1.81 per million British thermal units) as of 2:50 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.’s Alberta system. NGX gas has declined 32 percent this year.

Natural gas for July delivery on the New York Mercantile Exchange declined 14.2 cents, or 5.4 percent, to settle at $2.485 per million Btu. The June contract, which expired at the close of trading today, fell 13.9 cents to $2.429.

Pipeline Flows

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.5 billion cubic feet, 303 million below target.

Gas was flowing at a daily rate of 2.09 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 2.03 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.11 billion cubic feet. The system was forecast to carry 1.51 billion cubic feet today, or 58 percent of its capacity of 2.62 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 2.73 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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