Canadian Natural Gas Falls on Higher-Than-Expected U.S. Storage

Canadian natural gas fell to the lowest price in more than a month after a U.S. government report showed storage levels increased more than expected last week.

July gas in Alberta declined 8.9 percent following the Energy Department report that U.S. stockpiles expanded by 62 billion cubic feet to 2.877 trillion. Analyst estimates compiled by Bloomberg forecast an increase of 58 billion and a survey of Bloomberg users predicted a gain of 56 billion. The five-year average stockpile rise for the week is 99 billion cubic feet.

“We put a little bit more into storage than people anticipated,” Gordon Elliott, a risk management specialist at Intl FC Stone LLC in St. Louis Park, Minnesota, said in a telephone interview. “That’s a killer in itself, but when you have so much stocks to begin with, and the short-covering rally we’ve had has passed and the trend has turned.”

Alberta gas for July delivery declined 16.75 cents to C$1.72 a gigajoule ($1.59 per million British thermal units), the lowest level since May 2, as of 3:10 p.m. New York time. 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 is down 35 percent this year.

Natural gas for July delivery on the New York Mercantile Exchange fell 14.7 cents to settle at $2.274 per million Btu.

Spot Prices

Spot gas at the Alliance delivery point near Chicago dropped 8.05 cents, or 3.3 percent, to $2.3688 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 10.74 cents, or 5 percent, to $2.0615 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices fell 11.62 cents, or 5.1 percent, to $2.173.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.8 billion cubic feet at 3 p.m. New York time.

Gas was flowing at a daily rate of 2.04 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 1.97 billion cubic feet.

There was a shortage of available capacity on TransCanada’s British Columbia system at Kingsgate of 43 million cubic feet. The system was forecast to carry 2.03 billion cubic feet today, or 2.2 percent more than its normal capacity of 1.98 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 2.77 billion cubic feet at 2:05 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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