Bloomberg News

Canadian Natural Gas Rises on Forecasts for Hotter U.S. Weather

June 26, 2012

Canadian natural gas rose on forecasts for hotter weather in the U.S. that may boost demand for the fuel to power air conditioners.

July gas in Alberta advanced 1.6 percent as Weather Derivatives of Belton, Missouri, predicted cooling demand will be 46 percent above normal in the northern U.S. Midwest, Canada’s largest export market, through July 3.

“We’re going to see a nice recovery in the next four or five days with serious heat coming to Chicago, the Midwest and New York,” Peter Linder, president of the DeltaOne Energy Fund in Calgary, said in a telephone interview.

Alberta gas for July delivery increased 3.25 cents to C$2.07 gigajoule ($1.92 per million British thermal units) as of 3:45 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. (TRP)’s Alberta system. NGX gas is down 20 percent this year, from $2.58 Dec. 31.

Natural gas for July delivery on the New York Mercantile Exchange rose 7.3 cents to settle at $2.767 per million Btu.

“The Central U.S. is likely to see ongoing extreme temps,” and “the mid-Atlantic will remain plenty hot as well,” Travis Hartman, a meteorologist with MDA EarthSat Weather, wrote in a 6- to 10-day forecast today.

The high in Chicago on June 28 may be 95 degrees Fahrenheit (35 Celsius), 12 above normal, according to AccuWeather Inc. in State College, Pennsylvania.

Spot Gas

Spot gas at the Alliance delivery point near Chicago rose 0.74 cent to $2.7691 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 1.26 cents to $2.3083 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices gained 0.68 cent to $2.3848.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.5 billion cubic feet at 3 p.m. New York time.

Gas was flowing at a daily rate of 2.16 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 1.85 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 948 million cubic feet. The system was forecast to carry 1.67 billion cubic feet today, or 64 percent of normal 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 2.86 billion cubic feet at 2:05 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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