Canadian Gas May Rise on High Cost of Competing Oil-Based Fuel

Canadian natural-gas prices may rise on increased demand from industrial customers switching from more costly oil-based fuel.

Spot gas in New York sold for $7.13 per million British thermal units yesterday, a discount of 13 percent, or $1.02 per million Btu, to heavy fuel oil, according to data compiled by Bloomberg. Five to 10 percent of U.S. factories can switch between gas and oil-based fuel depending on price and availability.

Gas prices should “average closer to 50 cents per million Btu less than residual fuel during the non-heating season,” Ron Denhardt, vice president of gas services at Strategic Energy & Economic Research, said in a note.

Spot gas at EnCana Corp.’s AECO C hub in Alberta, the nation’s largest trading point, fell 2 cents to C$5.86 per gigajoule ($5.37 per million Btu) yesterday, Bloomberg data showed.

Bloomberg