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Canada Natural Gas Rises as Hot Weather to Boost Power Demand

Canadian natural gas rose on forecasts for hot weather that would boost demand from power plants in Canada and the Northern U.S.

August gas in Alberta advanced 2.3 percent as most of Canada and the U.S. were expected to have temperatures 3 degrees Fahrenheit (2 Celsius) to 14 degrees hotter than normal through July 7, according to MDA EarthSat Weather of Gaithersburg, Maryland.

“It seems that it’s a little bit of a demand issue for weather,” Gordy Elliott, a risk management specialist at Intl FC Stone LLC in St. Louis Park, Minnesota, said in a telephone interview.

Alberta gas for August delivery increased 5 cents to C$2.2125 per gigajoule ($2.03 per million British thermal units) as of 5 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.

Natural gas for August delivery on the New York Mercantile Exchange fell 7.6 cents to settle at $2.722 per million Btu.

Weather Derivatives of Belton, Missouri, predicted cooling demand will be 68 percent above normal in the Midwest, Canada’s largest export market, through July 5.

“The focus of the hottest conditions remains over the Midwest, where ongoing upper ridging and drought at the surface will help to keep temps well above normal,” Travis Hartman, a meteorologist with MDA EarthSat, wrote today in a forecast for July 8 to July 12.

Louisville Record

The high in Louisville, Kentucky, tomorrow may be 105 degrees Fahrenheit, 17 above normal, according to AccuWeather Inc. in State College, Pennsylvania. It would break a record of 102 degrees set in 1936, the service said on its website.

Alberta gas fell earlier after the Energy Department said U.S. stockpiles grew by 57 billion cubic feet to 3.063 trillion in the week ended June 22. Analyst estimates compiled by Bloomberg forecast an increase of 53 billion.

Spot gas at the Alliance delivery point near Chicago fell 7.93 cents to $2.8867 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 2.65 cents to $2.5039 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices dropped 3.08 cents to $2.6421.

Alberta Flows

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.7 billion cubic feet at 5 p.m. New York time.

Gas was flowing at a daily rate of 1.96 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 2.03 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 538 million cubic feet. The system was forecast to carry 2.08 billion cubic feet today, or 79 percent of normal capacity of 2.62 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 2.87 billion cubic feet at 4:50 p.m.

To contact the reporter on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net

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

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