Bloomberg News

Canadian Natural Gas Declines on Forecast U.S. Heat to Subside

July 06, 2012

Canadian natural gas fell from a five-month high to the lowest price in a week on forecasts for moderating temperatures after a U.S. mid-Atlantic heat wave, signaling less demand for fuel to run air conditioners.

August gas in Alberta declined 5.5 percent from the highest level since Jan. 25 to the lowest since June 29 as MDA EarthSat Weather of Gaithersburg, Maryland, predicted seasonal temperatures across much of the central U.S. and Northeast for July 11-15.

“It’s just a combination of slower weekend demand plus people seeing the weather doesn’t look as it’s going to be as hot for the next week,” Martin King, an analyst with FirstEnergy Capital Corp., in Calgary, said by telephone.

Alberta gas for August delivery decreased 12.5 cents to C$2.155 per gigajoule ($2 per million British thermal units) as of 3:25 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 16 percent this year, from C$2.58 on Dec. 31, and risen 33 percent from C$1.625 at the end of March.

Natural gas for August delivery on the New York Mercantile Exchange declined 16.9 cents to settle at $2.776 per million Btu.

Cooler Weather

The high in Chicago on July 11 may be 81 degrees Fahrenheit (27 Celsius), 4 below normal, according to AccuWeather Inc. in State College, Pennsylvania. New York may reach 82, 2 lower than normal.

Spot gas at the Alliance delivery point near Chicago fell 4.35 cents, or 1.5 percent, to $2.965 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 1.54 cents, or 0.6 percent, to $2.5547 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices advanced 1.6 cents to $2.7657.

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 3:30 p.m. New York time.

Gas was flowing at a daily rate of 2.03 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 also 2.09 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 721 million cubic feet. The system was forecast to carry 1.9 billion cubic feet today, or 72 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 2.98 billion cubic feet at 2:20 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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