Bloomberg News

Canadian Natural Gas Declines for a Second Day on U.S. Inventory

June 08, 2012

Canadian natural gas fell for a second day to the lowest price in more than a month after U.S. storage levels increased more than expected last week.

July gas in Alberta declined 1.3 percent. U.S. stockpiles expanded by 62 billion cubic feet to 2.877 trillion, the Energy Department reported yesterday. Analyst estimates compiled by Bloomberg estimated the rise at 58 billion and a survey of Bloomberg users predicted 56 billion. The five-year average stockpile gain for the week is 99 billion cubic feet.

“That storage number being above expectation proves that while power generation is strong and industrial demand remains near last year’s level, the supply side is also strong and that’s definitely weighing on the market,” Eric Bickel, an analyst at Summit Energy Services in Louisville, Kentucky, said in a telephone interview.

Alberta gas for July delivery declined 2.25 cents to C$1.6925 a gigajoule ($1.56 per million British thermal units), the lowest level since April 30, as of 3 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. NGX gas is down 35 percent this year.

Natural gas for July delivery on the New York Mercantile Exchange rose 2.5 cents to settle at $2.299 per million Btu.

Spot Prices

Spot gas at the Alliance delivery point near Chicago dropped 13.76 cents, or 5.8 percent, to $2.2312 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 declined 11.63 cents, or 5.6 percent, to $1.9452 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices fell 12.54 cents, or 5.8 percent, to $2.0476.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.4 billion cubic feet at 3 p.m. New York time.

Gas was flowing at a daily rate of 2.11 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 1.89 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 24 million cubic feet. The system was forecast to carry 1.96 billion cubic feet today, or 99 percent of its normal 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 2.82 billion cubic feet at 1:50 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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