for week ending July 22, 2001 | Release date: July 23, 2001 | Previous weeks
Another mid-summer week of relatively mild
temperatures in many of the nation's major gas consuming market regions and a
large estimate of net injections of working gas into storage put downward
pressure on spot and futures prices.Some parts of New England saw high temperatures only in the 70s for
several days last week, while highs in the 80s stretched down the mid-Atlantic
region as far as northern Georgia and well into the Midwest.On the West Coast, highs rarely exceeded 80
degrees, with a number of locations reporting highs in the 60s. (See Temperature Map) (See Deviation from Normal Temperatures Map). Spot prices declined for
the week in nearly all markets, with spot gas at the Henry Hub trading at $2.95
per MMBtu on Friday, down $0.21 from the previous Friday.The NYMEX futures contract for August
delivery fell even more, ending the week down $0.295 per MMBtu at $2.955—the
first sub-$3 settlement for a near-month contract since April 11 of last
year.The spot price for West Texas
Intermediate (WTI) crude oil fell four days in a row and traded on Wednesday
and Thursday below $25 per barrel before recovering Friday to $25.60 per
barrel, or $4.41 per MMBtu. This, too, is the first time since last April that
WTI has fallen below $25 per barrel, and is the second week in a row of losses
of $1 or more per barrel.
Prices:
Last week's trading opened with
cash prices continuing their slide from the previous Friday's session, with
spot gas at the Henry Hub slipping 8 cents to $3.08 per MMBtu on Monday.After falling to $2.93 per MMBtu on Monday,
July 2, the Henry Hub spot price has fluctuated within a relatively tight range
between $3.00-$3.30.Although spot
prices rallied slightly on Tuesday and Wednesday, they ultimately could not
withstand the pervasive lack of weather-related swing demand in many areas of
the country.Even the sweltering heat
covering a huge portion of the Midcontinent, from as far north as the Dakotas
and Montana, down into Texas and encompassing much of the Southwest, did little
more than lend a bit of support to Wednesday's prices.Spot prices fell on Thursday, mostly in the
10-15 cent range, as markets digested the American Gas Association (AGA)
estimate of a 110 Bcf net increase in working gas.The fall continued in a similar range at many locations on
Friday, so that by the end of the week, sub-$3 prices prevailed in nearly all
markets, with prices below $2 per MMBtu at some Rockies locations.Citygate prices in New York and Chicago were
down 14 and 22 cents, respectively, from the previous Friday, at $3.27 and
$2.93 per MMBtu.In California, one-day
price drops of $0.88 and $1.03 per MMBtu occurred on Friday on SOCAL and
PG&E, respectively, in response to weekend high-inventory operational flow
orders. Prices on these systems ended the week at $2.90 and $2.37, down 25 and
30 cents, respectively, from the previous Friday.
After trading within 6 cents of
the $3 per MMBtu level on 5 separate days since becoming the near-month
contract on June 28, the NYMEX contract for August delivery finally fell below
this benchmark on Thursday, settling at $2.939 per MMBtu.The September contract followed suit,
settling at $2.985.Just one week ago,
the August contract settled at $3.428 per MMBtu, a considerable rebound from
its previous low of $3.096 on June 29. The large AGA storage additions estimate
contributed to the near-15-cent one-day drop in the August contract, which was
accompanied by drops of 10-16 cents in all out-month contracts through August
2002.This is the first time since
April 11, 2000 that a near-month contract has settled below $3 per MMBtu.Futures prices ended the week with a slight
upturn, with gains of 5 cents or less for contracts for delivery through
February 2002. As of the end of trading
Friday, gas for delivery in December 2001 and January 2002 was priced at $3.595
and $3.710 per MMBtu, respectively.
Spot Prices ($ per MMBTU)-Selected
Trading Centers |
Mon. 7/16 |
Tues. 7/17 |
Wed. 7/18 |
Thur. 7/19 |
Fri.7/20 |
Henry Hub |
3.08 |
3.12 |
3.15 |
3.03 |
2.95 |
New York citygates |
3.37 |
3.41 |
3.47 |
3.33 |
3.27 |
Chicago citygates |
3.07 |
3.13 |
3.16 |
3.02 |
2.93 |
Northern CA PG&E |
3.04 |
3.21 |
3.32 |
3.40 |
2.37 |
Southern CA (SOCAL) |
3.74 |
3.81 |
4.03 |
3.78 |
2.90 |
Futures (Daily
Settlement, $MMBTU) |
|
|
|
|
|
August Delivery |
3.068 |
3.165 |
3.087 |
2.939 |
2.955 |
September Delivery |
3.14 |
3.232 |
3.146 |
2.985 |
2.997 |
Source: Financial Times
Energy, Gas Daily |
Storage:
EIA estimates working gas in storage at 2,138 Bcf as
of July 13, just 149 Bcf below the high end of the average range (See Storage Figure).
The change in working gas in storage according to the American Gas Association
was 110 Bcf, which consisted of net injections of 96 Bcf during the week with
an additional 14 Bcf because of a correction in the West Region. The net
injection of 96 Bcf for the week ended July 13 surpassed the 6-year average
(1995-2000) by 16.8 percent. While net injections in the East and Producing
regions fell short of record levels, the net injection of 12 Bcf in the West
(net of the correction) broke a benchmark that stood since 1998.The record cumulative injections during this
refill season have restored stocks in each region to levels exceeding the
6-year average. In order to achieve 3 Tcf by November 1, 2001, 7.8 Bcf per day
needs to be added to stocks through the remainder of the refill season, which
is well below the 6-year average for the period from July 14 through October 31
of 8.6 Bcf per day.
All Volumes
in BCF |
Current
Stocks (Fri,7/13) |
Estimated
6-Year (1995-2000) Average |
Percent
Difference from 6 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri,7/6) |
|
East Region |
1,189 |
1,151 |
3.3% |
62 |
1,127 |
|
West Region |
307 |
296 |
3.7% |
26 |
281 |
|
Producing Region |
642 |
552 |
16.2% |
22 |
620 |
|
Total Lower 48 |
2,138 |
1,999 |
6.9% |
110 |
2,028 |
|
Note:net change data are estimates published by
AGA on Wednesday of each week.All
stock-level Figures are EIA estimates based on EIA monthly survey data and
weekly AGA net-change estimates.Column sums may differ from Totals because of independent rounding. |
||||||
Imports of natural gas into the United States
continue to grow steadily.Pipeline
imports of natural gas from Canada increased by slightly more than 5 percent in
2000 to 3.54 Tcf, following a 10-plus percent growth in 1999.EIA data through April indicate that
pipeline imports from Canada have increased an additional 9 percent
year-to-date, to about 1.27 Tcf.The
opening of the Alliance Pipeline has undoubtedly facilitated some of this
increase. This pipeline has a current capacity to transport about 1.3 Bcf per
day from producing areas in British Columbia and Alberta to Chicago and other
Midwest markets.
Summary:
The apparent expansion of
supplies this year has resulted in reduced price volatility in recent weeks.
Spot and futures prices both drifted lower as summer heat has yet to materialize
in heavy gas-consuming markets, and storage injections continue at unusually
large levels.The latest National
Weather Service 6-10 day forecast shows the possibility of above-average
temperatures reaching into the Midwest, but the markets reacted only slightly
by Friday.