for week ending September 16, 2001 | Release date: September 17, 2001 | Previous weeks
Last week was a week like no
other, as both financial and energy markets were disrupted Tuesday morning by
the attacks on the World Trade Center (WTC) and the Pentagon. The New York Mercantile Exchange (NYMEX), located
within four blocks of the WTC, closed almost immediately after the first
attack; spot markets throughout the country closed soon after news of the
attacks reached them. Futures trading
did not resume until Friday, and then only in an abbreviated session using the
NYMEX ACCESS system. Regular,
open-outcry trading resumed at around 11:30 AM today (Monday, September 17).
Cash markets did re-open last Wednesday, and continued to operate, albeit at
reduced activity levels, through the rest of the week. Temperatures in most parts of the country
were seasonable early in the week, but by week's end were falling in the
Northeast and the Midwest as a cold front moved down from the north. (See Temperature Map) (See Deviation from Normal
Temperatures Map) At the Henry Hub, spot prices
gained 6 cents from the preceding week, ending trading on Friday at $2.41 per
MMBtu. In its one day of open-outcry
trading, the futures contract for October delivery fell $0.108 per MMBtu to
settle at $2.392. The spot price for
West Texas Intermediate crude oil slipped slightly on Monday to $27.65 per
barrel, or $4.77 per MMBtu.
Prices:
Tuesday's events caused all natural gas trading to
come to a halt. The industry was able to resume trading of spot gas on
Wednesday, as most of the larger energy trading firms such as ENRON, Dynegy,
Duke Energy, El Paso, and others re-opened their respective on-line and
telephone-based trading operations. While trading continued throughout the
week, nearly all participants were trading only to cover essential positions
and balancing requirements. Daily
volumes traded, according to Gas Daily, were
off 34 percent on Wednesday from Monday's levels. By Friday, volumes had recovered to about 86 percent of the
previous Friday's reported volumes. Despite minimal temperature-driven demand and a large storage injection
estimate, spot prices at most locations increased slightly on a
Friday-to-Friday basis, with gains primarily in the range of a nickel to a
dime. Price increases were a few pennies more in the Appalachian region and
into Northeast citygates. Notable
exceptions to the slight upward trend were in the West and in Florida. Spot prices at the PG&E citygate were
down about 16 cents to $2.21 per MMBtu, as cooler temperatures and the tapering
of agricultural processing activities eased demand. In Florida, generally moderate temperatures beginning midweek and
Tropical Storm Gabrielle's cooling rains and cloud cover dampened demand,
sending prices on Florida Gas Transmission down 18 cents to $3.32 per
MMBtu.
On Friday the NYMEX reopened for trading from
4:00-6:00 PM using its on-line ACCESS system. During this session, amid light
trading volumes, the October contract opened at $2.720 per MMBtu, then declined
steadily to $2.670. Because of
Tuesday's interruption, NYMEX has decided that all transactions made in last
Monday's overnight ACCESS session, and any trades made last Tuesday, will be
cleared against last Monday's settlement price, which was $2.392 per
MMBtu. On Monday, September 17, in the
first open-outcry trading session since last Tuesday, the near-month contract
opened trading at $2.552 per MMBtu.
Spot Prices ($ per MMBTU)-Selected
Trading Centers |
Mon. 9/10 |
Tues. 9/11 |
Wed. 9/12 |
Thur. 9/13 |
Fri. 914 |
Henry Hub |
2.39 |
2.47 |
2.45 |
2.39 |
2.41 |
New York citygates |
2.69 |
2.81 |
2.84 |
2.69 |
2.66 |
Chicago citygates |
2.37 |
2.51 |
2.49 |
2.39 |
2.39 |
Northern CA PG&E |
2.24 |
2.03 |
2.19 |
2.13 |
2.11 |
Southern CA (SOCAL) |
2.33 |
2.29 |
2.33 |
2.27 |
2.22 |
Futures (Daily
Settlement, $MMBTU) |
|
|
|
|
|
October Delivery |
2.392 |
Closed |
Closed |
Closed |
2.670* |
November Delivery |
2.674 |
Closed |
Closed |
Closed |
NA |
Source: Financial
Times Energy, Gas Daily. *Final price
reported during on-line ACCESS trading session. NA=not available |
Storage:
Storage stocks increased by 95
Bcf during the week ended September 7, 2001, according to American Gas
Association (AGA) estimates. The average
daily rate of net injections for the week was 13.6 Bcf per day, which is over
37 percent greater than the 6-year average rate for September. Although robust
relative to historical levels, injections for the week fell slightly below the
100 Bcf level expected by some market participants. The estimated 2,703 Bcf in total working gas with almost 2 months
remaining in the refill season already exceeds the 2,699 Bcf in storage at the
beginning of last heating season (See
Storage Figure). Assuming
the refill rate equals the 6-year average for the remainder of the refill
season, working gas stocks will reach 3,135 Bcf by the end of October
2001.
All Volumes
in BCF |
Current
Stocks (Fri,9/07) |
Estimated 6-Year
(1995-2000) Average |
Percent
Difference from 6 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri,8/31) |
|
East Region |
1,572 |
1,543 |
1.9% |
60 |
1,512 |
|
West Region |
371 |
330 |
12.5% |
10 |
361 |
|
Producing Region |
760 |
628 |
21.0% |
25 |
735 |
|
Total Lower 48 |
2,703 |
2,501 |
8.1% |
95 |
2,608 |
|
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. |
||||||
Other Market Trends:
According to Baker-Hughes, there were 993 rigs drilling gas prospects during the week ended September 7. This is the first time that the gas rig count has fallen below 1,000 since May 18 of this year. For the week of September 14, the count fell by another 12 rigs to 981. Although this is down from the peak of 1,068 recorded for the week of July 13, 2001, it is still 36 percent above the average of 720 for all of 2000. By comparison, the average rig count for 1990-1999 was only 441.
Summary:
Natural gas markets were completely, but only
temporarily, disrupted by the attacks of Tuesday, September 11. Beginning
Wednesday, spot markets were back in operation, with most locations gaining
slightly from the previous week. Futures trading was halted for nearly the entire remainder of the week.
Working gas stocks continue to grow at significantly greater-than-average
rates.