Canadian natural gas dropped on forecasts of cooler weather in the U.S. that may reduce demand for imports of the fuel for electricity generation.
September gas in Alberta slid 3.4 percent as MDA EarthSat Weather in Gaithersburg, Maryland, predicted normal temperatures on the East Coast and in the northern Midwest from Aug. 8 through Aug. 17. A 72 percent rally to a seven-month intraday high of $3.277 per million British thermal units on July 31 from $1.902 on April 19 was overdone, said Mike Fitzpatrick, editor of the Energy OverView newsletter in New York.
“With cooler temperatures right around the corner, and economics favoring coal again, gas had extended far into overvalued territory,” Fitzpatrick said in a note to clients today. The increase in gas prices may prompt power plants to switch to less-costly coal, he said.
Alberta gas for September delivery fell 7.5 cents to C$2.1575 per gigajoule ($2.05 per million British thermal units) as of 3:15 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.
Natural gas for September delivery on the New York Mercantile Exchange dropped 4.3 cents, or 1.5 percent, to settle at $2.877 per million Btu. The futures have declined 3.7 percent this year.
The high in New York on Aug. 14 may be 76 degrees Fahrenheit (24 Celsius), 7 below the usual reading, according to AccuWeather Inc. in State College, Pennsylvania. The high in Chicago may be 82 degrees, the norm for the day.
Electricity producers account for about 36 percent of U.S. gas consumption, Energy Department data show.
Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.2 billion cubic feet at 2 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 2.05 billion cubic feet.
Available capacity on TransCanada’s British Columbia system at Kingsgate was 107 million cubic feet. The system was forecast to carry 1.91 billion cubic feet today, compared with the estimated capacity of 2.018 billion.