Canadian Natural Gas Advances as U.S. Heat Wave Boosts Demand
Canadian natural gas rose to the highest price in more than five months as a heat wave scorched the U.S. mid-Atlantic and Great Lakes regions, signaling increased demand for fuel to run air conditioners.
August gas in Alberta advanced 2.6 percent to the most since Jan. 25 as states from Missouri to Delaware were expected to have temperatures as much as 14 degrees Fahrenheit (8 Celsius) above normal through July 9, according to MDA EarthSat Weather of Gaithersburg, Maryland. U.S. inventories were 25 percent above the five-year average on June 22, down from a 60 percent surplus March 30.
“It’s warm outside; they’re still burning quite a bit of natural gas in the electricity sector in particular,” Kyle Cooper, director of research with IAF Advisors in Houston, said in a telephone interview. “That storage overhang is being reduced at a pretty rapid pace.”
Alberta gas for August delivery increased 5.75 cents to C$2.2825 per gigajoule ($2.13 per million British thermal units) as of 3:20 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.
Alberta gas has fallen 12 percent this year, from C$2.58 on Dec. 31, and risen 40 percent from C$1.625 at the end of March.
Natural gas for August delivery on the New York Mercantile Exchange advanced 4.6 cents to settle at $2.945 per million Btu.
The high in Washington, D.C., on July 7 may be 104 degrees, 15 above normal, according to AccuWeather Inc. in State College, Pennsylvania. That would break a record of 102 set in 2010.
Spot gas at the Alliance delivery point near Chicago surged 13.11 cents, or 4.6 percent, to $3.0085 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 8.46 cents, or 3.5 percent, to $2.5393 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices advanced 10.58 cents, or 4 percent, to $2.7497.
Gas was flowing at a daily rate of 2.02 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 also 2.02 billion cubic feet.
The available capacity on TransCanada’s British Columbia system at Kingsgate was 815 million cubic feet. The system was forecast to carry 1.8 billion cubic feet today, or 69 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 2.94 billion cubic feet at 2:20 p.m.
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