Bloomberg News

Canadian Natural Gas Falls on Higher-Than-Expected U.S. Storage

June 28, 2012

Canadian natural gas fell after a U.S. report showed inventories rose more than expected, which may lower demand for the fuel to power air conditioners.

August gas in Alberta declined 0.7 percent as the Energy Department said U.S. stockpiles grew by 57 billion cubic feet to 3.063 trillion in the week ended June 22. Analyst estimates compiled by Bloomberg forecast an increase of 53 billion.

“With fully loaded storage inventories we need all the help we can get in terms of a tight market and so that’s a disappointing number to the market,” Cameron Horwitz, of U.S. Capital Advisers LLC in Houston, said in a telephone interview. “It does seem like there’s some relief in the Northeast, where you’ve had some heat, and you should see some moderation on the call for gas-fired power generation here over the next few days.”

Alberta gas for August delivery decreased 1.5 cents to C$2.0725 per gigajoule ($1.90 per million British thermal units) as of 2:05 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 August delivery on the New York Mercantile Exchange fell 10.7 cents, or 3.8 percent, to $2.691 per million Btu at 2:08 p.m.

Weather Derivatives of Belton, Missouri, predicted cooling demand will be 68 percent above normal in the northern U.S. Midwest, Canada’s largest export market, through July 5.

Hot Weather

Most of Canada and the U.S. are expected to have temperatures 3 degrees Fahrenheit (2 Celsius) to 14 degrees hotter than normal through July 7, sliding to as much as 7 degrees warmer than usual until July 12, according to MDA EarthSat Weather of Gaithersburg, Maryland.

“Details were finally adjusted slightly to the cooler side today following a long streak of warmer change,” Travis Hartman, a meteorologist with MDA EarthSat, wrote in a forecast for July 3 to July 7. “Temperatures along the East Coast were scaled back some to decrease both the intensity and coverage.”

The high in Louisville, Kentucky, tomorrow may be 105 degrees Fahrenheit, 17 above normal, according to AccuWeather Inc. in State College, Pennsylvania.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.7 billion cubic feet at 2 p.m. New York time.

Gas was flowing at a daily rate of 1.95 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 2.04 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 562 million cubic feet. The system was forecast to carry 2.06 billion cubic feet today, or 79 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 2.91 billion cubic feet at 12:50 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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