Bloomberg News

Canadian Natural Gas Advances on Forecast for Further U.S. Heat

July 09, 2012

Canadian natural gas rose to the highest price in more than five months as meteorologists forecast higher temperatures in the U.S., signaling increased demand for fuel to run air conditioners.

August gas in Alberta advanced 5.8 percent to the most since Jan. 25 as MDA EarthSat Weather of Gaithersburg, Maryland, predicted temperatures as much as 14 degrees Fahrenheit (8 Celsius) above normal for July 14-18 across the U.S. Midwest and Northeast.

“More than anything else, it’s the weather in the U.S.,” Karl Kriese, executive vice president of Peregrine Financial Canada Inc., said by telephone from Collingwood, Ontario. “They’re record-breaking temperatures, they’re just in a sweatbox down there.”

Alberta gas for August delivery increased 12.5 cents to C$2.285 per gigajoule ($2.11 per million British thermal units) as of 4:45 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.

Alberta gas has fallen 11 percent this year, from C$2.58 on Dec. 31, and risen 41 percent from C$1.625 at the end of March.

Natural gas for August delivery on the New York Mercantile Exchange rose 10.7 cents to settle at $2.883 per million Btu.

Cooler Weather

The high in Chicago on July 17 may be 95 degrees Fahrenheit, 10 above normal, according to AccuWeather Inc. in State College, Pennsylvania. New York also may reach 95, 11 more than usual.

“This period has turned a bit warmer across the northern tier,” Travis Wertz, a meteorologist at MDA EarthSat, said in a note to clients. “The resultant heat within the Midwest will be of a lesser intensity than what has been common the past week to 10 days, but still well above normal.”

Spot gas at the Alliance delivery point near Chicago dropped 6.26 cents, or 2.1 percent, to $2.9024 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 fell 0.78 cent, or 0.3 percent, to $2.5469. At Malin, Oregon, where Canadian gas is traded for California markets, prices advanced 1.74 cents, or 0.6 percent, to $2.7831.

Alberta System

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 4:30 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 1.84 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 787 million cubic feet. The system was forecast to carry 1.83 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 2.77 billion cubic feet at 3:35 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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