Canadian natural gas prices rose on forecasts for colder weather that may increase demand for the heating fuel.
Gas increased as much as 2.3 percent. Heating demand is expected to increase as low temperatures spread over the eastern U.S. into mid-November, said Weather Derivatives of Belton, Missouri. Traders said Hurricane Sandy may cut demand if power goes out on the East Coast.
“Temperatures are still down, but if you have power outages you may see less natural gas demand,” said Eric Bickel, an analyst with Summit Energy Services in Louisville, Kentucky. “Right now, I think Sandy is leaving that an open question.”
November gas in Alberta rose 7.25 cents to C$3.175 per gigajoule ($3.01 per million British thermal units) at 12:40 p.m. New York time on NGX, a Canadian electronic exchange.
Natural gas for November delivery on the New York Mercantile Exchange rose 6.3 cents, or 1.9 percent, to $3.463 per million Btu. The November contract expires today. Pit trading in New York was canceled because of the storm.
“Overnight modeling has reiterated a very decisive cold snap for the eastern half of the U.S. going toward mid-November,” David Salmon, forecaster for Weather Derivatives, wrote in a note to clients today. Low temperatures in the central and southeastern U.S. will push heating demand to 4 percent above normal this week, he said.
Hurricane Sandy’s center is expected to make landfall later today on the southern New Jersey coast near Atlantic City, according to the National Hurricane Center. Hurricane-force winds and storm surges are expected for portions of the coastline from Virginia to Massachusetts.
“Nat gas demand could be lower for the next week or so depending on the extent of the power outages across the storm area,” Dominick Chirichella of the Energy Management Institute in New York wrote in a note to clients.
Canada gas exports to the U.S. fell to 5.25 billion cubic feet a day in the week ended Oct. 25, down 14.8 percent from the five-year average, according to LCI Energy Insight, an El Paso, Texas, energy consulting firm.
Volume on TransCanada’s Alberta system, which collects the output from most of Canada’s gas wells, was 15.5 billion cubic feet at 11 a.m. New York time, 96 percent its target rate.
Gas was flowing at a daily rate of 2.11 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 rate was 2.03 billion cubic feet.
TransCanada’s British Columbia system at Kingsgate had 1.24 million cubic feet per day of available capacity. The system was forecast to carry 1.48 billion cubic feet today, 54 percent of 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 3.12 billion cubic feet at 11:35 a.m.