Overview:  Monday, September 24, 2001

Mild temperatures and moderate demand helped prices to decline gradually last week as markets returned to relatively normal operation.  (See Temperature Map) (See Deviation from Normal Temperatures Map)  At the Henry Hub, the spot market price for natural gas ended the week at $2.04 per million Btu, down 37 cents per million Btu from the previous Friday.  On the futures market, the near-month (October) NYMEX contract settled on Friday at $2.103 per million Btu – off close to 60 cents from the previous Friday.  The spot price for West Texas Intermediate (WTI) crude oil   fell steadily  from $28.85 per barrel  ($4.974 per million Btu) on Monday to $ 25.50 or $4.40 per million Btu on Friday.

 

 

Prices:

Spot prices at many major market locations took a downward turn last week.  Prices at the Henry Hub closed on Monday at $2.35 per million Btu, down 6 cents per million Btu from the previous Friday, and fell between 3 and 17 cents each day that followed.   On Friday, prices dropped to $2.04 per million Btu, the lowest level since November 1999.  Similarly, prices at many locations throughout the country fell throughout the week.  At the New York and Chicago citygates, prices fell from $2.69 and $2.39 per million Btu to $2.30 and $2.04, respectively.  Prices in the west at the Northern California (PG&E) and Southern California (SoCal) hubs climbed on Tuesday before falling to $1.67 and $1.79 on Friday.  In the Rockies, prices fell below the $1 mark for the first time since 1998 as prices at some locations in Wyoming ranged between $0.83 and $1.10 on Friday.  These price drops have occurred in part because industrial demand has continued to soften in the wake of the events of September 11, and in part because temperatures remain mild throughout much of the country. 

 

At the NYMEX, open-outcry trading resumed on Monday, September 17, at 11:45 a.m., Eastern Time, for the first time since the tragic events of September 11, with the price of the October futures contract for delivery at the Henry Hub opening at $2.425 per million Btu.  Prices declined throughout much of the week.  On Friday the price of the contract for delivery in October settled at $2.103 per million Btu. 

 

Spot Prices ($ per MMBTU)-Selected Trading Centers	Mon. 9/17	Tues. 9/18	Wed. 9/19	Thur. 9/20	Fri.  9/21
Henry Hub	2.35	2.18	2.13	2.07	2.04
New York citygates	2.62	2.43	2.38	2.34	2.30
Chicago citygates	2.33	2.19	2.13	2.08	2.04
Northern CA PG&E	2.19	2.15	2.07	2.01	1.67
Southern CA (SOCAL)	2.31	2.16	2.05	1.94	1.79
Futures (Daily Settlement, $MMBTU)
October  Delivery	2.369	2.225	2.102	2.137	2.103
November Delivery	2.753	2.603	2.427	2.464	2.467
Source: Financial Times Energy, Gas Daily.

 

Storage:

Net injections once again reached record-setting levels, as the American Gas Association (AGA) estimated a 90 Bcf stock build for the week ended September 14.  That week’s record-setting estimate marks the eleventh week out of 25 thus far in the refill season that weekly net injections have been the highest in the 8-year history of the AGA data series.  As of September 14, cumulative net injections since the end of March have reached 2,051 Bcf.  Resulting total inventories, at an EIA-estimated 2,793 Bcf, are 468 Bcf above stock- volume estimates for  this date last year and just 12 Bcf less than the EIA-estimated high for this point in the refill season over the past 6 years (1995-2000).  The total net injection estimate of 90 Bcf is 18 percent higher than the 6-year average, and all regional injections exceeded their respective averages.  The net injection of 10 Bcf in the West region is double the 6-year average, while the 28 Bcf injected in the Producing region is over 20 percent greater than the average of 23 Bcf.   Net injections in the East region were about 7 percent greater than average. (See Storage Figure)

 

All Volumes in BCF	Current Stocks (Fri,9/14)	Estimated 6-Year (1995-2000) Average	Percent Difference from 6 Year Average	Net Change from Last Week	One-Week Prior Stocks (Fri,9/7)
East Region	1,624	1,590	2.2%	52	1,572
West Region	381	335	13.8%	10	371
Producing Region	788	645	22.2%	28	760
Total Lower 48	2,793	2,570	8.7%	90	2,703
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. *Revised to incorporate EIA survey data for June 2001.

 

Summary:

Moderate demand driven by mild temperatures and softening industrial demand caused energy prices to fall throughout much of the nation last week.  Working gas stocks  continue to grow robustly, and already exceed the highest levels recorded for all of last year.