Canadian natural gas declined as traders sold contracts after U.S. prices reached a nine-month high.
October gas in Alberta fell 1.2 percent, breaking a three-day stretch of rising prices, after U.S. storage data yesterday showed inventories advancing to 3.576 trillion cubic feet last week, a record seasonal level.
Traders were taking profits after futures on the New York Mercantile Exchange surged yesterday to the highest level since December, said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. “Prices got more exuberant than is justified by current fundamentals,” he said.
Alberta gas for October delivery dropped 3 cents to C$2.495 per gigajoule ($2.41 per million British thermal units) as of 3:05 p.m. New York time.
Natural gas for November delivery on the Nymex rose 2.3 cents to settle at $3.32 per million British thermal units, as concern eased that inventories will reach their limits before winter boosts demand for the fuel.
Mild weather is expected for most of the U.S. into the middle of next week. A cool front forecast to move into Canada and the U.S. Midwest from Oct. 5-9 may drive Chicago’s low to 40 degrees Fahrenheit (4 Celsius), according to MDA EarthSat Weather of Gaithersburg, Maryland.
“It’s going to get chilly for a week or two, but far from mid-winter-type cold, before slow warming trends should return thereafter,” MDA forecaster Bob Haas wrote in a note to clients.
U.S. heating demand over the next seven days is expected to be 47 percent below the seasonal average, Weather Derivatives in Belton, Missouri, said today.
Volume on TransCanada’s Alberta system, which collects the output from most of Canada’s gas wells, was 15.8 billion cubic feet at 2 p.m. New York time.
Gas was flowing at a daily rate of 2.17 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 1.93 billion cubic feet.
Capacity on TransCanada’s British Columbia system at Kingsgate was oversubscribed by 118 million cubic feet. The system was forecast to carry 1.78 billion cubic feet today. Estimated capacity was 1.67 billion.
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 2.81 billion cubic feet at 2:05 p.m.
Net Canadian gas exports to the U.S. averaged 5.57 billion cubic feet per day in the seven days ended Sept. 20, according to data collected by LCI Energy Insight, an El Paso, Texas energy advisory firm.
Spot gas at the Alliance delivery point near Chicago rose 10.72 cents, or 3.6 percent, to $3.092 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 declined 0.95 cent, or 0.3 percent, to $2.8093 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices rose 7.19 cents, or 2.4 percent, to $3.0326.