Canada Gas Declines on U.S. East Coast Seasonal Weather Outlook

Canadian natural gas declined on forecasts for normal U.S. East Coast weather next week that may curb demand for the power-plant fuel.

August gas in Alberta fell 4.8 percent as Commodity Weather Group LLC in Bethesda, Maryland, predicted temperatures in the East will drop to seasonal norms July 30 through Aug. 3. Unusually warm weather has spurred fuel demand from power plants, driving New York gas futures 27 percent higher since the end of May.

“We’ve gone so far so quickly in the last few weeks,” said Peter Linder, president of the DeltaOne Energy Fund in Calgary. “It’s a temporary pause for both the U.S. and Canadian natural gas. The forecast for August is still warmer than normal and I believe we are going to see, finally, falling U.S. production.”

Alberta gas for August delivery declined 11.75 cents to C$2.34 per gigajoule ($2.19 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 11.7 cents, or 3.7 percent, to $3.07 per million Btu, after settling yesterday at a seven-month high of $3.187.

Weather Outlook

The high temperature in Washington on Aug. 1 may be 86 degrees Fahrenheit (29 Celsius), 2 below normal, and New York City may be 3 below normal at 84 degrees, according AccuWeather Inc. in State College, Pennsylvania. Indianapolis will see a high of 85 degrees Aug. 1, 1 above normal, down from today’s projected high of 102 degrees, 17 above normal.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.1 billion cubic feet at 4 p.m. New York time.

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.

There was no available capacity on TransCanada’s British Columbia system at Kingsgate because of an excess of 50 million cubic feet of volume. The system was forecast to carry 2.068 billion cubic feet today, more than the estimated capacity of 2.018 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 2.8 billion cubic feet at 4:35 p.m.

To contact the reporter on this story: Naureen S. Malik in New York at Nmalik28@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net