Natural Gas Summary from the Short-Term
Energy Outlook |
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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.
Source: Energy
Information Administration, Short-Term Energy Outlook, October 2002. Need Help? |
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Energy Information Administration, EI 30 |
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