Canada Natural Gas Slips as Storage Build Beats Expectations

Canadian natural gas slipped after the U.S. government reported a higher-than-expected increase in gas supplies, indicating that demand for imports may weaken.

November gas in Alberta declined 0.1 percent. The U.S. Energy Department said gas inventories rose 77 billion cubic feet to 3.653 trillion in the week ended Sept. 28. Analyst estimates compiled by Bloomberg showed an expected increase of 73 billion.

“It’s essentially neutral, the storage number, so I don’t think we’re going to see any big price declines today,” said Martin King, an analyst with FirstEnergy Capital Corp. in Calgary. “People are looking through this right now and forward to the winter season. We’ve got some cold weather in the West and it’s supposed to start cooling off out East.”

Forecasters shifted their outlooks for mid-October toward colder weather. Commodity Weather Group LLC of Bethesda, Maryland said in a note to clients today that it expects a “more aggressive” push of cooler air to move into the eastern and central U.S. from Canada between Oct. 9 and Oct. 13. Average U.S. heating demand may be 30 percent above normal over the next seven days, according to Weather Derivatives of Belton, Missouri.

Alberta gas for November delivery declined 0.25 cent to C$2.9675 per gigajoule ($2.87 per million British thermal units) as of 3:55 p.m. New York time on NGX, a Canadian electronic exchange.

Natural gas for November delivery on the New York Mercantile Exchange rose 1.1 cents, or 0.3 percent, to $3.406 per million Btu.

Pipeline Flows

Volume on TransCanada’s Alberta system, which collects the output from most of Canada’s gas wells, was 15.5 billion cubic feet at 3 p.m. New York time, 776 million cubic feet below target.

Gas was flowing at a daily rate of 1.93 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 2.16 billion cubic feet.

There was no capacity available on TransCanada’s British Columbia system at Kingsgate. The system was forecast to carry 1.67 billion cubic feet today, matching estimated capacity.

The volume on Spectra Energy Corp.’s British Columbia system, which gathers the fuel in northeastern British Columbia for delivery to Vancouver and the Pacific Northwest, totaled 2.83 billion cubic feet at 2:50 p.m.

To contact the reporter on this story: Edward Welsch in Calgary at ewelsch1@bloomberg.net

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

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