Bloomberg News

Canada Natural Gas Falls on Outlook for Milder Weather

June 01, 2012

Canadian natural gas fell amid forecasts of milder-than-normal U.S. weather that may pare demand for power-generating fuels.

July gas in Alberta fell 5.5 percent. Cooling demand in the U.S. Midwest, the biggest-consuming region for Canada’s gas exports, will trail normal by 43 percent through June 8, according Belton, Missouri-based Weather Derivatives. U.S. stockpiles of gas were 35 percent above the five-year average as of May 25, according to the Energy Department.

“The focus is all on the weather now,” said Carl Neill, a consultant with Risk Management Inc. in Atlanta. “Storage is going to be very full this year.”

Alberta gas for July delivery tumbled 11 cents to C$1.8825 a gigajoule ($1.71 per million British thermal units) 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 is down 9.6 percent this week.

Natural gas for July delivery on the New York Mercantile Exchange fell 9.6 cents to settle at $2.326 per million Btu. The futures fell 9.4 percent this week.

Spot gas at the Alliance delivery point near Chicago fell 11 cents, or 4.7 percent, to $2.2332 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 declined 10.33 cents, or 4.8 percent, to $2.0585 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices were down 10.23 cents, or 4.5 percent, to $2.1632.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 17.4 billion cubic feet, 551 million above target.

Gas was flowing at a daily rate of 2.53 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 1.49 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 874 million cubic feet. The system was forecast to carry 1.74 billion cubic feet today, or 67 percent of its capacity of 2.95 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 2.95 billion cubic feet at 2:50 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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