Bloomberg News

Canadian Natural Gas Rises on Outlook for More Cooling

June 04, 2012

Canadian natural gas rose from a three-week low amid forecasts of warmer-than-normal U.S. weather that may increase demand for the fuel to run air conditioners.

July gas in Alberta gained 3.7 percent. Cooling demand in the U.S. Midwest, the biggest-consuming region for Canada’s gas exports, will surpass normal by 8 percent through June 11, Belton, Missouri-based Weather Derivatives said. The high temperature in Chicago on June 9 may be 85 degrees, 7 above normal, said AccuWeather Inc. in State College, Pennsylvania.

The 6- to 10-day outlook is “opening the door to the next opportunity for 90 degrees Fahrenheit (32 Celsius) heat in parts of the Midwest,” Travis Hartman, a meteorologist at MDA EarthSat Weather in Gaithersburg, Maryland, said in a note to clients. “The Northeast should start the period near normal but will also warm to above thereafter.”

Alberta gas for July delivery advanced 7 cents to C$1.97 a gigajoule ($1.80 per million British thermal units) on NGX, a Canadian internet market at 4:05 p.m. New York time. The price was C$1.90 June 1. Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp. (TRP)’s Alberta system.

Natural gas for July delivery on the New York Mercantile Exchange rose 8.9 cents to settle at $2.415 per million Btu.

Spot gas at the Alliance delivery point near Chicago jumped 14.56 cents, or 6.5 percent, to $2.3788 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 surged 12.1 cents, or 5.9 percent, to $2.1795 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices gained 11.12 cents, or 5.1 percent, to $2.2744.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.8 billion cubic feet.

Gas was flowing at a daily rate of 2.01 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 1.93 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 290 million cubic feet. The system was forecast to carry 1.69 billion cubic feet today, or 85 percent of its capacity of 1.98 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 2.83 billion cubic feet at 3:05 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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