April 7, 2010 / 8:16 PM / 7 years ago

Canadian spot gas skids on moderate weather

CALGARY, Alberta (Reuters) - Canadian spot natural gas prices fell on Wednesday as moderate weather forecasts left little prospect of higher heating demand in key markets and futures fell.

Spot gas at the AECO storage hub in southeastern Alberta dropped 16 Canadian cents to average C$3.54 a gigajoule.

Deals were done between C$3.47 and C$3.65 a GJ.

Canadian spot gas prices are nearly unchanged from a year ago on concerns about weak demand while production rises, particularly from shale-gas fields in the United States, and high inventories of the fuel remain a worry.

Last week’s U.S. Energy Information Administration report showed total gas inventories rose to 1.638 trillion cubic feet. That was 16 billion cubic feet, or 1 percent, below last year’s level but 160 bcf, or 11 percent, above the five-year average.

A Reuters poll on Wednesday showed inventories were expected to climb 29 bcf when weekly EIA storage data is released on Thursday at 10:30 a.m. EDT (1430 GMT).

Stocks rose an adjusted 17 bcf for the same week last year, while the five-year average gain for that week is 11 bcf.

In weather, Environment Canada called for Toronto highs to remain above the 10 Celsius (50 Fahrenheit) seasonal average for most of the next six days, with the exception of Friday, when the temperature is expected to dip to 6 C (43 F).

Southern Alberta temperatures are forecast to be at or just above seasonal averages Thursday, then cool to below the 10 C (50 F) norm through Tuesday, the agency said.

AccuWeather.com expects temperatures in the U.S. Northeast and Midwest, key gas-consuming regions, to average above normal for most of the next week, with highs in the mid-teens to low 20s C (60s to 70s F).

The New York Mercantile Exchange May contract ended down 7.7 cents, or 2 percent, at C$4.019 per million British thermal units, pressured by mild weather forecasts and ample supplies, despite support from ongoing nuclear plant outages.

Alberta’s main pipeline system ran at 15.37 bcf, 477 million cubic feet above the target linepack set by operator TransCanada Corp.

Producers delivered 9.94 bcf to the system and 960 mmcf was injected into the province’s storage facilities.

Canadian export prices dropped. Spot gas at Niagara, Ontario, which is delivered to the U.S. Northeast, fell 10 cents to average $4.51 per mmBtu.

Spot gas prices at Huntingdon-Sumas on the British Columbia Washington border fell 8 cents to $4.19 per mmBtu.

$1=$1.01 Canadian

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