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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 average $4.50 per MMBtu in September and range between $4.37 and $4.58 per MMBtu in the last 3 months of 2003 (Short-Term Energy Outlook, September 2003). Spot prices at the Henry Hub have fallen somewhat from the unusually high levels that prevailed in the first half of the year and most of July, as mild summer weather in many areas of the country has reduced cooling demand and allowed record storage refill rates.  As of September 5, working gas levels were only 5.5 percent below the 5-year average and, barring any disruptions, are on target to reach 3 Tcf by the end of October. However, gas prices remain high—wellhead prices this summer are estimated to be 60 to 70 percent higher than levels last summer. Overall in 2003, wellhead prices are expected to average $4.84 per MMBtu, which is nearly $2 more than the 2002 annual average and the largest year-to-year increase on record. For 2004, assuming normal weather, wellhead prices are projected to drop by about $1 per MMBtu, or almost 20 percent, to $3.89 per MMBtu, as the overall supply situation improves.

Natural gas production is expected to increase by about 2.4 percent in 2003.  Following the downturn in natural gas-directed drilling activity in 2002, higher natural gas prices and sharply higher oil and natural gas field revenues continue to drive the resurgence in drilling this year. The number of rigs drilling for natural gas has totaled more than 900 since the week ending June 13 and averaged 932 in August. In 2004, production is expected to remain at modestly improved levels. The prospects for significant reductions in natural gas wellhead prices in 2004 depend on the productivity of the expected upsurge in drilling.

Natural gas demand growth is expected to be flat in 2003 because of reduced demand in the industrial sector and the sharply lower weather-related demand during the summer months.  Demand for natural gas this summer is estimated to be 2.6 percent less than last summer’s level, owing largely to the 11 percent fewer cooling degree-days compared with last summer and the effect of high natural gas prices on consumption in the industrial and electricity-generating sectors.  In 2004, demand is projected to remain flat as increases in industrial and commercial sector demand are offset by lower demand in the electric power sector.

 


 

Short-Term Natural Gas Market Outlook, September 2003 

 

History

Projections

 

Jun-03

Jul-03

Aug-03

Sep-03

Oct-03

Nov-03

PRICES ($/MMBtu)

 

 

 

 

 

 

  Average Wellhead Price

5.22

4.78

4.60

4.50

4.37

4.48

  Residential Price

11.98

12.27

12.23

11.62

10.33

9.45

  Electric Utilities Price

5.67

5.17

4.94

5.01

4.92

5.28

 

 

 

 

 

 

 

SUPPLY (Trillion Cubic Feet)

 

 

 

 

 

 

  Total Dry Gas Production

1.590

1.651

1.657

1.605

1.665

1.612

  Net Imports

0.278

0.308

0.326

0.320

0.311

0.293

    Imports

0.332

0.365

0.384

0.377

0.369

0.353

    Exports

0.054

0.056

0.058

0.057

0.059

0.060

  Suppl. Gaseous Fuels

0.005

0.006

0.006

0.006

0.006

0.007

  Total New Supply

1.873

1.966

1.989

1.931

1.982

1.912

 

 

 

 

 

 

 

  Working Gas in Storage

 

 

 

 

 

 

    Opening

1.217

1.710

2.095

2.410

2.782

3.001

    Closing

1.710

2.095

2.410

2.782

3.001

2.842

  Net Storage Withdrawal

-0.493

-0.386

-0.315

-0.372

-0.219

0.160

 

 

 

 

 

 

 

  Total Supply

1.380

1.580

1.674

1.559

1.763

2.072

 

 

 

 

 

 

 

  Balancing Item

0.107

0.071

0.003

-0.031

-0.221

-0.277

 

 

 

 

 

 

 

  Total Primary Supply

1.487

1.651

1.677

1.528

1.543

1.795

 

 

 

 

 

 

 

DEMAND (Trillion Cubic Feet)

 

 

 

 

 

 

  Lease & Plant Fuel

0.082

0.084

0.082

0.075

0.077

0.080

  Pipeline Use

0.043

0.051

0.053

0.048

0.049

0.054

  Delivered to Consumers

1.363

1.516

1.542

1.405

1.416

1.660

    Residential

0.152

0.114

0.104

0.119

0.206

0.435

    Commercial

0.137

0.131

0.127

0.128

0.180

0.276

    Industrial

0.562

0.590

0.602

0.578

0.620

0.617

    Electric Power

0.512

0.682

0.709

0.580

0.410

0.332

  Total Demand

1.487

1.651

1.677

1.528

1.543

1.795

 

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

 

 

 

 

 

 

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