Canadian Natural Gas Gains as U.S. Heat Pares Stockpile Growth

Canadian natural gas rose amid speculation that hotter-than-normal weather in the U.S. reduced additions to stockpiles, decreasing a record surplus.

June gas in Alberta rose 1.6 percent. Cooling demand across the U.S. was more than double normal levels in the week ended May 4, according to Weather Derivatives. Temperatures surged in the Midwest, the biggest consuming region for Canada’s gas output. Chicago’s high May 3 was 86 degrees Fahrenheit (30 Celsius), 20 above normal, AccuWeather Inc. said.

“If our estimated storage change is correct, this would mean a cumulative decline of 186 billion cubic feet from the peak storage level of five weeks ago,” said Stephen Smith, an energy analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi. Smith estimates storage rose 21 billion cubic feet, compared with a five-year average of 25 billion.

Alberta gas for June delivery gained 2.75 cents to C$1.785 a gigajoule ($1.71 per million British thermal units) as of 2:50 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. NGX gas has declined 37 percent this year.

Natural gas for June delivery advanced 5.7 cents, or 2.5 percent, to settle at $2.336 per million Btu on the New York Mercantile Exchange.

Spot Prices

Spot gas at the Alliance delivery point near Chicago gained 6.66 cents, or 2.9 percent, to $2.3534 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 rose 1.52 cents to $2.0721 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices increased 8.34 cents, or 4 percent, to $2.1735.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.4 billion cubic feet, 378 million below target.

Gas was flowing at a daily rate of 2.06 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 1.25 billion cubic feet. The system was forecast to carry 1.37 billion cubic feet today, or 52 percent of its capacity of 2.23 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 2.88 billion cubic feet at 1:35 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: Dan Stets at dstets@bloomberg.net

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