Natural Gas Summary from the Short-Term
Energy Outlook |
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Natural
Gas Summary from the Short-Term Energy Outlook: Now that the heating season has ended, natural gas wellhead prices have fallen from the exceptionally high levels seen in February and early March. Nevertheless, they still remain historically and unseasonably high, hovering around $5.00 per MMBtu. EIA projects that natural gas wellhead prices will remain above $5.00 per MMBtu in April and then decrease to $4.36 in May and $4.26 in June (Short-Term Energy Outlook, April 2003). Wellhead prices for the 2002-2003 heating season (November through March) averaged $4.44 per MMBtu, or $2.08 more than last winter’s price. Overall in 2003, wellhead prices are projected to increase about $1.53 per MMBtu over the 2002 level to $4.40 per MMBtu. This projection is based on the expectation of lower volumes of natural gas in underground storage compared with last year and continued increases in demand over 2002 levels. Cold temperatures this past winter led to a record drawdown of storage stocks. By the end of March, estimated working gas stocks were 676 Bcf (prior estimates were 696 Bcf), which is the lowest end-of-March level in EIA records and 44 percent below the previous 5-year average. In 2004, continued tightness of domestic natural gas supply and high demand levels are expected to keep the average wellhead price near the 2003 level. Despite high natural gas prices,
natural gas demand is projected to increase by 2.7 percent in 2003,
particularly if industrial sector consumption expands significantly as
expected. Sharply higher
weather-related demand is already a fact for the first quarter of 2003, as
gas demand increased by 6.7 percent while the economy rose by 2.2 percent. In
2004, natural gas demand is projected to continue to rise as industrial
demand continues its recovery from its 2002 lows. Natural gas
production, which fell by about 2.6 percent in 2002, is projected to increase
by 1.5 percent in 2003. High natural gas prices and growing oil and gas field
revenues are expected to lead to a resurgence in gas-directed drilling
activity, which could push gas drilling totals in 2004 close to the high levels
seen in 2001. Domestic production
growth should accelerate in 2004 but, given recent experience, production
increases might be less than 2 percent. With demand expected to outpace
production growth, natural gas imports are expected to rise.
Note: Latest wellhead price from the Short-Term Energy Outlook
is based on preliminary data. Source: Energy
Information Administration, Short-Term Energy Outlook, April 2003. Need Help? |
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Energy Information Administration, EI 30 |
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