Canadian Natural Gas Prices Climb as Price Drop Prompts Buying

Canadian natural gas for June delivery rose for the first day in five as traders sought bargains and covered bets on earlier declines.

Gas at Canada’s benchmark AECO C hub in Alberta had slipped 6.2 percent since May 16, according to data compiled by Bloomberg. The prospect that prices may have hit bottom probably has some traders covering short positions, or bets on price declines, said Martin King, senior commodities analyst at FirstEnergy Capital Corp. in Calgary.

“They couldn’t push it any further to the downside” without hitting technical resistance, King said. “It’s been moving back and forth in a range.”

Alberta gas for June delivery rose 9 cents, or 2.6 percent, to C$3.56 per gigajoule ($3.48 per million British thermal units) as of 2:30 p.m. New York time, according to NGX, a Canadian Internet market. Gas traded on the exchange goes to users in Canada and the U.S. and is priced on TransCanada Corp.’s Alberta system.

Natural gas for June delivery on the New York Mercantile Exchange rose 13.6 cents, or 3.3 percent, to settle at $4.23 per million Btu.

Spot Prices Fall

Gas for prompt delivery tumbled as cool weather forecast for the U.S. Midwest pares air-conditioner use. Chicago will have a high of 59 degrees Fahrenheit (15 Celsius), about 15 degrees colder than normal, according to State College, Pennsylvania-based forecaster AccuWeather Inc.

Gas at the Alliance Pipeline delivery point near Chicago fell 11.73 cents, or 2.8 percent, to $4.1042 per million Btu on the Intercontinental Exchange. Alliance is an express line that 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 slipped 14.46 cents, or 3.6 percent, to $3.8253 per million Btu, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 15.51 cents, or 3.8 percent, to $3.9416.

Alberta System

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.2 billion cubic feet as of 2 p.m. in New York, 51 million above its target level. Some Alberta producers have been forced to shut gas wells because of forest fires in the northern portion of the province.

Gas was flowing at a daily rate of 2.74 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 1.59 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 506 million cubic feet. The system was forecast to carry 1.48 billion cubic feet today, about 75 percent of its capacity of 1.98 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 1:50 p.m.

Source: http://www.bloomberg.com/news/2011-05-20/canadian-natural-gas-prices-climb-as-price-drop-prompts-buying.html