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Canadian Natural Gas Falls as U.S. Stockpiles Forecast to Grow

Canadian natural gas fell for the first time in a week amid analyst estimates that U.S. inventories rose last week.

June gas in Alberta fell 5 percent. U.S. stockpiles probably rose 30 billion cubic feet last week, the median of analyst estimates compiled by Bloomberg. The five-year average increase is 79 billion, according to the Energy Department. Slowing additions to storage may not be enough to reduce a 908 billion-cubic-foot surplus to the five-year average before heating season begins.

“Gas prices here in North America continue to reflect the combination of oversupply and an unusually warm winter,” John Manzoni, chief executive officer of Talisman Energy Inc., said in a conference call from the company’s Calgary headquarters yesterday. “With the injection season upon us, it’s quite possible that this gets even worse before it gets better.”

Talisman said yesterday it cut the number of rigs drilling for gas in the Marcellus Shale formation in the U.S. Northeast to one from a projected three and trimmed its exploration and development budget by $400 million.

Alberta gas for June delivery fell 9 cents to C$1.725 a gigajoule ($1.66 per million British thermal units) as of 1:35 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 gas has declined 40 percent this year.

Natural gas for June delivery tumbled 11.8 cents, or 5 percent, to settle at $2.253 per million Btu on the New York Mercantile Exchange.

Spot Prices

Spot gas at the Alliance delivery point near Chicago slipped 0.4 cent to $2.3289 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 2.71 cents to $2.0955 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices slipped 0.09 cent to $2.1644.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.2 billion cubic feet, 564 million below target.

Gas was flowing at a daily rate of 1.99 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 2.13 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 493 million cubic feet. The system was forecast to carry 1.74 billion cubic feet today, or 78 percent of its capacity of 2.23 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 2.96 billion cubic feet at 1:50 p.m.

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