Bloomberg News

Canada Natural Climbs on Outlook for Hotter-than-Normal Weather

July 30, 2012

Canadian natural gas gained on forecasts for hotter-than-normal U.S. weather into mid-August that may boost demand for the power-plant fuel.

August gas in Alberta climbed 8.3 percent as MDA EarthSat Weather in Gaithersburg, Maryland, predicted above-normal temperatures concentrated in the central U.S. this week will spread across much of the country Aug. 4-13. Unusually hot weather has spurred demand from electricity generators that had already been switching from coal as U.S. gas prices fell to a decade low in April.

“A lot of traders who participated in natural gas for the last several weeks have been burned by saying this heat can’t last,” James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “Over the next four to six weeks, natural gas could easily touch $4.”

Alberta gas for August delivery rose 18.75 cents to C$2.46 per gigajoule ($2.33 per million British thermal units) as of 3:40 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 September delivery on the New York Mercantile Exchange advanced 19.9 cents, or 6.6 percent, to $3.214 per million Btu, the highest settlement price since Dec. 13. The futures are up 7.5 percent this year.

Hot Weather

Dallas may see a high temperature for the three days starting Aug. 1 of 106 degrees Fahrenheit (41 Celsius), 9 above normal each day, said AccuWeather Inc. in State College, Pennsylvania. The high in New York City may be 90 degrees on Aug. 3, 6 above normal, and Chicago may be 5 above at 87.

Cooling demand in the U.S. will be 18 percent above normal in the seven days ending Aug. 6, according to Weather Derivatives in Belton, Missouri. Power plants account for 36 percent of gas consumption in the nation, Energy department data show.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 15.8 billion cubic feet at 2:30 p.m. New York time, below the target of 16.2 billion.

Gas was flowing at a daily rate of 1.99 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 1.92 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 194 million cubic feet today. The system was forecast to carry 1.82 billion, 90 percent of the estimated capacity of 2.018 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 2.75 billion cubic feet at 2:35 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: Bill Banker at bbanker@bloomberg.net


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