Canadian Natural Gas Gains, Tracking Futures on Short Positions

Canadian natural gas rose, tracking an increase in New York futures that rebounded from their lowest level in a year as traders covered bets on falling prices.

Alberta gas rose 1.9 percent after the Commodities Futures Trading Commission said today net-short positions in four U.S. gas contracts held by managed money, including hedge funds, commodity pools and commodity-trading advisers, in futures and options grew 40 percent in the week ended Nov. 15 to 53,618. It was the most in records dating back to January 2010.

“The funds started short-covering,” said Gordy Elliott, a risk-management specialist with INTL FC Stone LLC in St. Louis Park, Minnesota. “It’s still a bearish, bearish situation” for gas demand.

Alberta gas for December rose 6 cents to C$3.15 per gigajoule ($2.88 per million British thermal units) as of 4:10 p.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 was up 8.3 cents to settle at $3.399 per million Btu after dropping to $3.285, matching the one-year low set Nov. 18.

Spot gas at the Alliance delivery point near Chicago rose 3.42 cents to $3.462 per million Btu on the Intercontinental Exchange. Alliance is an express line that can carry 1.5 billion cubic feet a day to the Midwest from western Canada.

Spot Prices

Spot gas at points in the U.S. West tumbled on forecasts of mild weather. Temperatures in Portland, Oregon, will be 53 degrees Fahrenheit (12 Celsius) on Nov. 30, 5 above normal, according to AccuWeather Inc. of State College, Pennsylvania.

At the Kingsgate point on the border of Idaho and British Columbia, gas tumbled 27.25 cents, or 7.8 percent, to $3.221, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 11.93 cents, or 3.5 percent, to $3.3436 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was at 15.9 billion cubic feet, 660 million below its target.

Gas was flowing at a daily rate of 1.8 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 1.81 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.14 billion cubic feet. The system was forecast to carry 1.59 billion cubic feet today, about 58 percent of its capacity of 2.72 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 2.71 billion cubic feet at 2:20 p.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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