Canadian Natural Gas Rises as Forecasters See Cold Weather Ahead

Canadian natural gas rose as forecasters predicted cooler weather for the U.S. Northeast, which would boost furnace use in the second-biggest consuming region for the nation’s gas output.

Alberta gas rose 0.6 percent. New York’s temperature will top out at 27 degrees Fahrenheit (minus 3 Celsius) Jan. 4, 12 degrees below normal, according to AccuWeather Inc. Demand for heat in the city will exceed normal by 48 percent that day, according to Weather Derivatives, helping offset higher output and inventories.

“Average onshore gas production has been running 5 billion to 6 billion cubic feet a day higher than year-ago levels,” said Stephen Smith, an analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi. “This represents the sustainable downward pressure on gas.”

Alberta gas for January delivery rose 1.5 cents to C$2.695 a gigajoule ($2.50 per million British thermal units) at 4:10 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.’s Alberta system. NGX Alberta gas has fallen 28 percent this year.

Gas for January delivery fell 2.8 cents, or 0.9 percent, to settle at $3.084 per million Btu on the New York Mercantile Exchange. U.S. stockpiles of the fuel probably dropped 86 billion cubic feet last week, the median of 11 analyst estimates compiled by Bloomberg. The five-year average drop is 122 billion.

Spot Prices

Spot gas at the Alliance delivery point near Chicago declined 4.2 cents, or 1.3 percent, to $3.1667 per million Btu on the Intercontinental Exchange. Alliance, an express line, can carry 1.5 billion cubic feet a day to the Midwest from western Canada.

At the Kingsgate point on the border of Idaho and British Columbia, gas gained 6.76 cents, or 2.3 percent, to $3.0709, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 0.8 cent to $3.1998.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.2 billion cubic feet, 672 million below its target.

Gas was flowing at a daily rate of 3 billion cubic feet at Empress, Alberta. The fuel is transferred to TransCanada’s main line at Empress.

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 2.11 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 800 million cubic feet. The system was forecast to carry 1.85 billion cubic feet today, about 70 percent of its capacity of 2.65 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 3:05 p.m.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE