Canadian Natural Gas Drops for Fifth Day on U.S. Stockpile Glut

Canadian natural gas fell for a fifth session as a glut of supplies in the U.S. pared demand for imports of the fuel.

Alberta gas dropped 3.7 percent. U.S. stockpiles stood at 2.595 trillion cubic feet last week, 40 percent above the five- year average, the Energy Department (DOENUST5) said yesterday. Canadian stockpiles were 521.3 billion cubic feet, a gain of 97 percent from last year, according to Canadian Enerdata. Most of the gas produced in Canada is exported to the U.S.

“We’re just blowing the records right out of the ballpark,” said Gordy Elliott, a risk-management specialist at INTL FCStone in St. Louis Park, Minnesota. “If you look where we’re at for storage this year for both Canada and the U.S., we’re setting records every week. We have so much natural gas around.”

Alberta gas for March delivery declined 7.5 cents to C$1.94 a gigajoule ($1.84 per million British thermal units) at 3:40 p.m. New York time on NGX, a Canadian Internet market. NGX gas has dropped 4.4 percent this week.

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 March delivery on the New York Mercantile Exchange fell 7.1 cents to settle at $2.55 per million Btu. The futures lost 5 percent this week.

Spot Prices

Spot gas at the Alliance delivery point near Chicago fell 9.09 cents, or 3.3 percent, to $2.6885 per million Btu on the Intercontinental Exchange. Alliance is an express line that can carry 1.5 billion cubic feet a day from western Canada.

At the Kingsgate point on the border of Idaho and British Columbia, gas declined 10.15 cents, or 3.9 percent, to $2.4776. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 10.27 cents, or 3.8 percent, to $2.5861.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.8 billion cubic feet, 25 million below target.

Gas was flowing at a daily rate of 2.77 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.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 597 million cubic feet. The system was forecast to carry 2.06 billion cubic feet today, or 77 percent of its capacity of 2.65 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 2.92 billion cubic feet at 2:35 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: Bill Banker at bbanker@bloomberg.net

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