Bloomberg News

Canada Natural Gas Falls on Storage, Lower U.S. Temperatures

July 03, 2012

Canadian natural gas fell from the highest price in more than a month as storage increases and cool weather in the U.S. Midwest and Northeast signaled reduced demand from power plants for fuel to run air conditioners.

August gas in Alberta declined 0.2 percent as inventories in Canada rose 1.3 percent to 590.25 billion cubic feet for the week ended June 22, according to Canadian Enerdata Ltd. States from New Mexico to Maine were expected to have temperatures as much as 3 degrees Fahrenheit (2 Celsius) lower than normal from July 8 to July 12, according to MDA EarthSat Weather of Gaithersburg, Maryland.

The market “is being swayed more from the supply side; you have a whole lot of gas in storage up there,” Eric Bickel, an analyst at Summit Energy Services in Louisville, Kentucky, said in a telephone interview.

Alberta gas for August delivery decreased 0.5 cent to C$2.21 per gigajoule ($2.07 per million British thermal units) as of 4 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.

Alberta gas has fallen 14 percent this year, from C$2.58 on Dec. 31, and advanced 36 percent from C$1.625 at the end of March.

Natural gas for August delivery on the New York Mercantile Exchange rose 7.5 cents to settle at $2.899 per million Btu.

Weather Impact

“The above-normal heat we’re seeing right now across most of the U.S. is really affecting that Nymex market,” Bickel said.

Cooling weather in the upper Midwest and Northeast July 8 to July 12 “could include a day or two” of below-normal temperatures, “though only of the marginal variety,” Travis Hartman, a meteorologist with MDA EarthSat, said today in a note to clients.

The high in Chicago on July 12 may be 74 degrees, 11 below normal, according to AccuWeather Inc. in State College, Pennsylvania.

Spot gas at the Alliance delivery point near Chicago surged 10.32 cents, or 3.7 percent, to $2.8774 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 rose 2.62 cents, or 1.1 percent, to $2.4547 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices advanced 3.81 cents, or 1.5 percent, to $2.6439.

Gas Flow

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 17.1 billion cubic feet at 4 p.m. New York time.

Gas was flowing at a daily rate of 1.92 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 2.01 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 778 million cubic feet. The system was forecast to carry 1.84 billion cubic feet today, or 70 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 2:50 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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