Bloomberg News

Canada Natural Gas Falls on Outlook for Milder Late-July Weather

July 19, 2012

Canadian natural gas dropped for the first time in three days on concern that moderate weather predicted for the end of July will limit demand for the fuel to run air conditioners.

August gas in Alberta fell 0.3 percent as MDA EarthSat Weather in Gaithersburg, Maryland, said above-normal temperatures expected next week in the Midwest and mid-Atlantic states will drop at the end of July. The U.S. Energy Department reported today that stockpiles rose 28 billion cubic feet to 3.163 trillion last week, 18 percent above the five-year average for the period.

“Storage levels are still very high and we are rapidly coming to the peak demand period for the summer,” said Kyle Cooper, director of research with IAF Advisors in Houston. “Demand will now start to fall.”

Alberta gas for August delivery declined 0.75 cent to C$2.275 per gigajoule ($2.14 per million British thermal units) as of 1:15 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.

Natural gas for August delivery on the New York Mercantile Exchange rose 1.9 cents, or 0.6 percent, to $2.992 per million Btu at 1:21 p.m.

Supply Report

U.S. stockpiles in the week ended July 13 rose to a record for this time of the year. Last week’s inventory gain was less than the five-year average gain of 74 billion for that period. The forecast was for an increase of 34 billion cubic feet, based on a median of 26 analyst estimates compiled by Bloomberg.

The high temperature in Minneapolis on July 31 may be 80 degrees Fahrenheit (27 Celsius), 2 below normal, according to AccuWeather Inc. in State College, Pennsylvania. The next day Boston’s high may be 10 below normal at 71 degrees.

Demand from power plants, which account for 36 percent of U.S. gas consumption, peaks in the summer when air conditioning use is highest.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.5 billion cubic feet at noon New York time.

Gas was flowing at a daily rate of 2.07 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 2.11 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 887 million cubic feet. The system was forecast to carry 1.73 billion cubic feet today, or 66 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 12:05 p.m.

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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