for week ending December 13, 2006 | Release date: December 14, 2006 | Previous weeks
Overview: Thursday, December 14 (next release 2:00 p.m. on December 21, 2006)
Softening
natural gas market conditions led to spot price decreases at most market
locations in the Lower 48 States since Wednesday, December 6, with decreases
ranging between $0.02 and $1.22 per MMBtu. The few price increases on the week
were mostly confined to market locations west of the Rocky Mountains. On
Wednesday, December 13, prices at the Henry Hub averaged $7.21 per MMBtu,
decreasing $0.13 per MMBtu, or about 2 percent, since the previous
Wednesday. The prices of futures
contracts through December 2007 changed only slightly since December 6. The
price for the January delivery contract decreased about 5 cents per MMBtu, or
about 1 percent on the week (Wednesday-Wednesday), settling at $7.673 per MMBtu
yesterday (December 13). Natural gas in
storage was 3,238 Bcf as of December 8, which is 7.5 percent above the 5-year
average. The spot price for West Texas
Intermediate (WTI) crude oil decreased 86 cents per barrel, or about 1 percent
on the week to $61.34 per barrel or $10.58 per MMBtu.
Higher-than-average
volumes of natural gas in underground storage and the return of
warmer-than-normal weather across much of the country during the week ended
December 13 led to spot prices decreases at most market locations in the Lower
48 States. The highest regional decrease on the week occurred in Florida at
$0.57 per MMBtu, despite Florida Gas Transmission Company extending an overage
alert day through the weekend (December 9-10). (See Other Market Trends) Trading locations in the Alabama/Mississippi
region and the Rockies recorded average decreases of 40 cents and 37 cents per
MMBtu, respectively. Price decreases in the Northeast region were somewhat less
pronounced, averaging about $0.26 per MMBtu. However, several key Northeast market locations that serve large
segments of the region had price decreases of more than $0.30 per MMBtu. Spot
prices at a number of locations, mostly west of the Rockies, increased on the
week. Prices in California increased 23 cents per MMBtu, to a regional average
of $7.28. Similarly, trading locations in the Arizona/Nevada area recorded an
increase of 11 cents per MMBtu to an average of $7.19 per MMBtu. As of
yesterday, the average price in the Rocky Mountains of $5.63 per MMBtu was the
lowest regional spot price average, and the only one under $6 per MMBtu. The
average prices in the remaining trading regions in the Lower 48 States ranged
yesterday between $6.681 per MMBtu in the Midcontinent and $7.688 per MMBtu in
the Northeast.
Estimated Average Wellhead Prices |
||||||
|
June-06 |
July-06 |
Aug-06 |
Sep-06 |
Oct-06 |
Nov-06 |
5.80 |
5.82 |
6.51 |
5.51 |
5.03 |
6.43 |
|
Price
($ per MMBtu) |
5.65 |
5.67 |
6.34 |
5.37 |
4.90 |
6.26 |
Note:
Prices were converted from $ per Mcf to $ per MMBtu using an average heat
content of 1,027 Btu per cubic foot as published in Table A4 of the Annual
Energy Review 2002. |
||||||
Source:
Energy Information Administration,
Office of Oil and Gas. |
Working
gas in storage decreased to 3,238 Bcf as of Friday, December 8, 2006, according
to EIA's Weekly Natural Gas Storage
Report (See
Storage Figure). The implied net withdrawal of 168 Bcf leaves storage levels 225 Bcf, or
7.5 percent, above the 5-year average, and 245 Bcf, or 8.2 percent above the
storage level at this time last year. This week's implied net withdrawal is 53 percent above the 5-year
average of 110 Bcf, but about 7 percent below last year's net withdrawal of 182
Bcf. Since the beginning of the heating season (November 1), net withdrawals
totaled 211 Bcf, which is higher than both the 5-year average withdrawal of 172
Bcf and last year's net withdrawal of 195 Bcf for the same time period. This
week's above average withdrawal likely resulted from the return of seasonal
temperatures across much of the Lower 48 States, especially in the major
population centers of the Midwest (See Temperature Maps). The East North Central Census Division, which
includes Chicago and other large consuming areas, and the West North Central
Census Division experienced temperatures that were 24 and 22 percent colder
than normal, respectively, as measured by the National Weather Service heating
degree-days. For the week ended December 7, temperatures for the Lower 48
States as a whole were about 12 percent colder than normal, but about 12
percent warmer than last year for the same week. In fact, all Census Divisions
except for the East South and West South Central Census Divisions recorded
temperatures that were warmer than last year.
EIA Releases
the November Short-Term Energy Outlook: The Energy Information Administration (EIA)
released the latest Short
Term Energy Outlook (STEO),
on December 12, 2006. With projected
colder weather during the first 3 months of 2007, compared with the same period
in 2006, natural gas spot prices at the Henry Hub are expected to average about
$8.58 per thousand cubic feet (Mcf) in the first quarter of 2007. The $8.58 per
Mcf price is approximately $0.65 per Mcf higher than in the first quarter of
2006. The Henry Hub spot price is
projected to average $7.06 per Mcf in 2006 and increase to $7.87 per Mcf in
2007. A combination of forecasted
warmer-than-normal weather this winter and high levels of natural gas in
storage are likely to keep monthly average natural gas spot prices below $9 per
Mcf throughout the heating season. Total
U.S. natural gas consumption in 2006 is expected to decline by 0.5 percent relative
to last year, primarily because of warm weather early in the year. Assuming the weather returns to normal,
consumption is likely to increase by 1.5 percent in 2007. Domestic dry natural gas production is likely
to increase by about 2.3 percent in 2006, then decrease in 2007 by 0.7
percent. As of December 1, the level of
working gas in storage was 3,406 billion cubic feet (Bcf), which was 232 Bcf
above the level last year at the same time and 282 Bcf higher than the 5-year
average.