Bloomberg News

Canadian Natural Gas Rises on Forecasts Before Inventory Report

June 27, 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 0.7 percent as Weather Derivatives of Belton, Missouri, predicted cooling demand will be 70 percent above normal in the northern U.S. Midwest, Canada’s largest export market, through July 4.

“In April, we’ve seen 10-year lows and recently we’ve seen a rebound in gas prices based on power generation demand and some inventory numbers that can be interpreted as bullish despite the fact that inventories are still quite high,” Ian Nathan, an analyst at Energy Intelligence Group in New York, said in a telephone interview.

Alberta gas for July delivery increased 1.5 cents to C$2.085 gigajoule ($1.93 per million British thermal units) as of 5:45 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 19 percent this year, from $2.58 Dec. 31.

Natural gas for July delivery on the New York Mercantile Exchange rose 0.7 cent to settle at $2.774 per million Btu.

The U.S. Energy Department reports tomorrow on domestic natural gas storage levels for the week ended June 22. It may show inventories climbed 53 billion cubic feet, according to the median of 22 analyst estimates compiled by Bloomberg.

“We expect this week’s storage report to show an injection of 55 billion cubic feet,” Eric Bickel, an analyst at Summit Energy Services in Louisville, Kentucky, said today in an e- mailed statement. He cited warm weather and low nuclear production last week as gas demand enhancers.

Hot Plains

“Hot temperatures will continue to span across the Plains and Midwest through much, if not all, of the forecast period with much-above-normal readings slowly shrinking in coverage late,” Travis Hartman, a meteorologist with MDA EarthSat Weather of Gaithersburg, Maryland, wrote today in a forecast for July 2 to July 6.

The high in Lawrence, Kansas, tomorrow may be 106 degrees Fahrenheit (41 Celsius), 20 above normal, according to AccuWeather Inc. in State College, Pennsylvania.

Spot gas at the Alliance delivery point near Chicago rose 19.69 cents to $2.966 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.

Border Flows

At the Kingsgate point on the border of Idaho and British Columbia, gas advanced 22.21 cents, or 9.6 percent, to $2.5304 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices gained 28.81 cents, or 12 percent, to $2.6729.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.6 billion cubic feet at 5:30 p.m. New York time.

Gas was flowing at a daily rate of 1.94 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 2.23 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 533 million cubic feet. The system was forecast to carry 1.84 billion cubic feet today, or 78 percent of normal capacity of 2.37 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 6:20 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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