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Canada Natural Gas Declines on Mild Weather, Near-Record Storage

Canadian natural gas fell amid forecasts of mild temperatures across the U.S., where most of Canada’s production is sold, and stockpiles that are approaching last year’s record.

Alberta gas fell 2.7 percent as forecasters including Weather Derivatives predicted warmer than normal temperatures. Demand for heat across the U.S. will trail normal by 12 percent through Nov. 14, the Belton, Missouri-based forecaster said. Inventories stood at 3.794 trillion cubic feet as of Oct. 28, 46 billion below last year’s Nov. 5 record.

“We should have about the same peak storage as last year,” said Stephen Smith, an analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi. “The maximum November storage peak won’t test current storage capacity,” leaving room for even more reserves, he said.

Alberta gas for December tumbled 9.25 cents to C$3.35 per gigajoule ($3.13 per million British thermal units) as of 10:35 a.m. New York time, according to 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.’s Alberta system.

Gas for December delivery on the New York Mercantile Exchange fell 9.7 cents to $3.686 per million Btu at 10:37 a.m.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was at 16.3 billion cubic feet, 280 million below its target.

Gas Flows

Gas was flowing at a daily rate of 2.14 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 1.95 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.04 billion cubic feet. The system was forecast to carry 1.55 billion cubic feet today, about 60 percent of its capacity of 2.58 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 3.02 billion cubic feet at 9:20 a.m.

To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net

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

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