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Natural Gas Summary from the Short-Term Energy Outlook
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Natural Gas Summary from the Short-Term Energy Outlook

   

 

 

Natural Gas Summary from the Short-Term Energy Outlook:

EIA projects that natural gas wellhead prices will range from $2.91 to $3.19 per MMBtu through December 2002 and then increase to $3.53 in January 2003, the peak demand month of the heating season (Short-Term Energy Outlook, October 2002). Natural gas prices climbed sharply in late September as hurricanes Isidore and Lili caused production shut downs in the Gulf of Mexico. However, this price surge is expected to be short-lived, unless the weather in October is unusually cold or if additional storm activity in the Gulf curbs production further. Overall in 2002, wellhead prices are expected to average about $2.76 per MMBtu compared with $4.00 in 2001. Prices during the upcoming heating season (November through March), assuming normal weather, are expected to average $3.32 per MMBtu, which is about $0.96 higher than last winter’s price. Prices to residential customers during the heating season are expected to average $7.55 per MMBtu compared with $7.14 last winter.

 

Domestic dry natural gas production is projected to fall by about 1.2 percent in 2002 compared with the 2001 growth rate of 2.4 percent. Lower natural gas prices have reduced production and resource development incentives from their highs of last year. Still, current supplies, including natural gas in storage, appear to be at very comfortable levels. Working gas in storage has remained well above the previous 5-year average since the beginning of the year. As of October 4, 2002, working gas stocks were 3,080 Bcf, which is 9 percent greater than the 5-year average and about 3 percent greater than last year at the same time. Furthermore, natural gas-directed drilling, while down sharply from 2001 levels, is still quite strong by a longer historical perspective. The weekly gas rig count in September averaged 736, which is nearly 25 percent more than the recent low of 591 for the week of April 5, 2002. In 2003, production is expected to rebound by 2.8 percent as demand rises and inventories fall back closer to normal.

 

Natural gas demand is expected to increase through the rest of 2002 and into 2003 because of the expectation of a continued upswing in the U.S. industrial economy in the next few months and the return of colder weather. Overall in 2002, natural gas demand is projected to increase by 3.6 percent over 2001 levels as higher estimated demand in the industrial and power sectors more than offsets the declines in space-heating demand in the first quarter of 2002. Also, heating-related demand during the fourth quarter of 2002 is expected to be greater than during the same period in 2001. In 2003, natural gas demand growth is expected to increase by 3.5 percent as the economy continues to recover. In 2003, natural gas demand growth is expected across all sectors.

 

 

 


 

Short-Term Natural Gas Market Outlook, October 2002 

 

History

Projections

 

Jul-02

Aug-02

Sep-02

Oct-02

Nov-02

Dec-02

PRICES ($/MMBtu)

 

 

 

 

 

 

  Average Wellhead Price

2.81

2.70

2.70

2.91

3.15

3.19

  Residential Price

9.32

9.44

9.05

8.07

7.49

7.35

  Electric Utilities Price

3.15

3.05

2.99

3.18

3.57

3.80

 

 

 

 

 

 

 

SUPPLY (Trillion Cubic Feet)

 

 

 

 

 

 

  Total Dry Gas Production

1.60

1.59

1.54

1.60

1.57

1.62

  Net Imports

0.28

0.29

0.27

0.29

0.28

0.30

    Imports

0.32

0.33

0.31

0.33

0.32

0.34

    Exports

0.04

0.04

0.04

0.04

0.04

0.04

  Suppl. Gaseous Fuels

0.00

0.00

0.00

0.00

0.00

0.01

  Total New Supply

1.877

1.882

1.812

1.888

1.853

1.917

 

 

 

 

 

 

 

  Working Gas in Storage

 

 

 

 

 

 

    Opening

2.308

2.558

2.792

3.058

3.221

3.070

    Closing

2.558

2.792

3.058

3.221

3.070

2.589

  Net Storage Withdrawal

-0.249

-0.234

-0.266

-0.163

0.151

0.481

 

 

 

 

 

 

 

  Total Supply

1.627

1.648

1.546

1.725

2.004

2.398

 

 

 

 

 

 

 

  Balancing Item

-0.002

0.027

0.068

-0.058

-0.076

-0.010

 

 

 

 

 

 

 

  Total Primary Supply

1.625

1.675

1.615

1.666

1.928

2.388

 

 

 

 

 

 

 

DEMAND (Trillion Cubic Feet)

 

 

 

 

 

 

  Lease & Plant Fuel

0.105

0.107

0.106

0.112

0.110

0.112

  Pipeline Use

0.040

0.040

0.036

0.039

0.049

0.064

  Delivered to Consumers

1.480

1.528

1.473

1.516

1.770

2.212

    Residential

0.139

0.131

0.150

0.228

0.449

0.739

    Commercial

0.151

0.149

0.151

0.194

0.285

0.403

    Industrial

0.841

0.903

0.910

0.905

0.894

0.941

    Elec Utility

0.349

0.345

0.262

0.190

0.141

0.128

  Total Demand

1.625

1.675

1.615

1.666

1.928

2.388

 

Source:  Energy Information Administration, Short-Term Energy Outlook, October 2002.

 

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