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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 remain relatively high through the rest of the winter and perhaps well into spring, with prices averaging $4.90 per MMBtu through March and $4.45 in April (Short-Term Energy Outlook, February 2003). Wellhead prices for the overall heating season (November through March), assuming normal weather for the rest of the winter, are expected to average $4.22 per MMBtu, or $1.86 more than last winter's level. Spot prices at the Henry Hub have been generally above $5.00 per MMBtu thus far in 2003, and briefly rose above $6.00 during the third week of January as Arctic weather covered much of the nation. Prices again topped $6.00 on February 4 and stayed above this threshold through February 12 in response to another blast of cold weather. Overall in 2003, average wellhead prices are projected to increase about $1.38 per MMBtu over the 2002 level to $4.25 per MMBtu. This projection is based on the expectation of lower volumes of underground gas in storage compared with last year and continued increases in demand (particularly in the first quarter) over 2002 levels. Cold temperatures since the first of the year have increased heating demand and led to a more rapid drawdown of storage stocks than previously anticipated. As of February 7, 2003, working gas in storage was about 37 percent lower than year-earlier levels and 19 percent below the previous 5-year average. In 2004, continued tightness of domestic natural gas supply is expected to keep the average wellhead price near the 2003 level.

 

Based on new data provided by the Minerals Management Service, estimates of dry natural gas production in 2002 have been revised downward to 18.9 trillion cubic feet (Tcf), which is 2.3 percent less than the 19.4 Tcf produced in 2001. Some of the reduction is due to outages in September and October related to hurricane activity. At least moderate production increases are expected in 2003 and 2004 as high natural gas prices and strong near-term demand pressures drive drilling activity and well completions to very robust levels over the period. Also, after growing by only 1.1 percent in 2002 owing to high stocks and lower demand, net imports of natural gas are expected to increase by 5.6 percent in 2003, which should relieve some of the potential pressure on the domestic market.

 

Total natural gas demand in 2002, based on data reported through September, declined by an estimated 1.4 percent from the 2001 level, mainly because of overall weakness in the industrial sector. However, solid growth in natural gas demand seems likely in 2003, especially if industrial sector consumption expands significantly as expected. In 2004, natural gas demand is projected to rise by an additional 2.4 percent as industrial demand continues its recovery from its 2002 lows.

 

Short-Term Natural Gas Market Outlook, February 2003

 

History

Projections

 

Nov-02

Dec-02

Jan-03

Feb-03

Mar-03

Apr-03

PRICES ($/MMBtu)

 

 

 

 

 

 

  Average Wellhead Price

3.50

3.74

4.08

4.73

5.07

4.45

  Residential Price

8.19

7.79

8.05

8.26

8.62

9.25

  Electric Utilities Price

4.27

4.61

5.02

5.72

5.98

5.24

 

 

 

 

 

 

 

SUPPLY (Trillion Cubic Feet)

 

 

 

 

 

 

  Total Dry Gas Production

1.53

1.58

1.64

1.47

1.64

1.57

  Net Imports

0.32

0.34

0.35

0.32

0.34

0.32

    Imports

0.36

0.37

0.38

0.35

0.37

0.34

    Exports

0.04

0.04

0.03

0.02

0.03

0.03

  Suppl. Gaseous Fuels

0.01

0.01

0.01

0.01

0.01

0.01

  Total New Supply

1.858

1.929

2.002

1.801

1.984

1.888

 

 

 

 

 

 

 

  Working Gas in Storage

 

 

 

 

 

 

    Opening

3.149

2.933

2.368

1.521

1.153

0.975

    Closing

2.933

2.368

1.521

1.153

0.975

1.126

  Net Storage Withdrawal

0.216

0.565

0.847

0.368

0.178

-0.151

 

 

 

 

 

 

 

  Total Supply

2.074

2.494

2.849

2.169

2.162

1.737

 

 

 

 

 

 

 

  Balancing Item

-0.145

-0.142

-0.207

0.230

0.089

0.087

 

 

 

 

 

 

 

  Total Primary Supply

1.928

2.352

2.642

2.399

2.250

1.824

 

 

 

 

 

 

 

DEMAND (Trillion Cubic Feet)

 

 

 

 

 

 

  Lease & Plant Fuel

0.098

0.102

0.103

0.093

0.103

0.098

  Pipeline Use

0.053

0.068

0.077

0.067

0.063

0.050

  Delivered to Consumers

1.778

2.182

2.462

2.239

2.085

1.675

    Residential

0.471

0.701

0.885

0.789

0.662

0.418

    Commercial

0.273

0.357

0.424

0.388

0.347

0.249

  Industrial

0.664

0.736

0.750

0.704

0.699

0.645

  Electric Power

0.370

0.388

0.403

0.358

0.377

0.364

  Total Demand

1.928

2.352

2.642

2.399

2.250

1.824


 

    Source:  Energy Information Administration, Short-Term Energy Outlook, February 2003.

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