Bloomberg News

Canada Gas Nears Highest Level in 10 Months on Cooler Forecasts

October 01, 2012

Canadian natural gas rose to the highest price in almost 10 months as forecasters shifted their outlooks toward cooler weather.

November gas in Alberta jumped as much as 5.2 percent to its highest price since Dec. 8 as temperatures in the central U.S. will be 3 to 5 degrees Fahrenheit (1.7 to 2.7 degrees Celsius) below normal during the first half October, according to MDA Earthsat Weather in Gaithersburg, Maryland.

“The forecast for the first half of October cooled substantially since Friday,” with much-below normal temperatures centered over the midcontinent in the six- to 10- day period, MDA forecaster Bob Haas wrote in a note to clients.

MDA said temperatures will reach at least 10 degrees below the seasonal average in many cities in the central U.S. this weekend. Chicago’s lows on Oct. 7 will drop to 34 degrees Fahrenheit, 12 degrees below average.

Alberta gas for November delivery rose 11.25 cents or 3.9 percent to C$2.9725 per gigajoule (US$2.87 per million British thermal units) as of 2:15 p.m. New York time on the NGX, a Canadian electronic exchange.

Natural gas for November delivery on the New York Mercantile Exchange rose 16 cents, or 4.8 percent, to settle at $3.48 per million Btu.

Canadian gas prices have risen 55 percent from C$1.915 on Aug. 28, as shrinking surpluses helped ease concern that a glut of would fill available storage.

Price Gains

The continued rise in natural gas prices is partly driven by momentum and a recent shift in the broader market from bonds toward riskier assets such as commodities, said Tim Evans, an energy analyst at Citi Futures Perspective in New York.

Net Canadian gas exports to the U.S. averaged 5.78 billion cubic feet a day in the seven days ended Sept. 27, up from 5.73 billion a year earlier, according to LCI Energy Insight, an El Paso, Texas, energy advisory firm.

Volume on TransCanada’s Alberta system, which collects the output from most of Canada’s gas wells, was 15.47 billion cubic feet at 1:30 p.m. New York time.

Gas was flowing at a daily rate of 2.38 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 2.08 billion cubic feet.

Capacity on TransCanada’s British Columbia system at Kingsgate was oversubscribed by 241 million cubic feet. The system was forecast to carry 1.91 billion cubic feet today. Estimated capacity was 1.67 billion.

The volume on Spectra Energy Corp.’s British Columbia system, which gathers the fuel in northeastern British Columbia for delivery to Vancouver and the Pacific Northwest, totaled 2.6 billion cubic feet at 1:20 p.m.

To contact the reporter on this story: Edward Welsch in Calgary at ewelsch1@bloomberg.net

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


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