Why would the gas cloud “heat up” because of close proximity to the black hole?
All matter near the black hole would be massively accelerated, meaning that their energies would be astronomical. They would not exist as atoms or molecules in that state.
Actually, I think the black hole's gravity may start to influence the cloud's mass; i.e., pull it toward the black hole. That attraction heats up the cloud to where the compressed gasses emit x-rays.
Here's an explanation from a different article and different case.
"The idea is that as the cloud speeds past these small black holes - some slightly more massive than our Sun but just a few tens of km across - gas will spiral around them faster and faster, heating up to millions of degrees and emitting X-ray light." http://www.bbc.co.uk/news/science-environment-22694229