for week ending September 30, 2001 | Release date: October 1, 2001 | Previous weeks
Seasonal temperatures in the
Northeast and an early-week cooling trend in Texas and parts of the Southeast
translated into little temperature-driven demand in many markets for much of
last week. This resulted in a steady decline
for spot prices in most regions. (See
Temperature Map) (See
Deviation from Normal Temperatures Map). On Monday, September 26, the Henry Hub spot price fell below $2.00 per
MMBtu for the first time since November 1999, and stayed below $2.00 for the entire
week. It ended trading Friday at $1.84
per MMBtu, 20 cents below the previous Friday's level. Likewise, the futures
contract for October delivery at the Henry Hub fell sharply on Monday, losing
over 19 cents to $1.910 per MMBtu. The
October contract closed out trading on Wednesday down further to $1.830 per
MMBtu. Crude oil prices took their largest one-day drop since the Persian Gulf
War on Monday, amid signs of impending recession and speculation that OPEC
would not decrease oil production. After
declining by $1.25 per barrel the previous Friday, the spot price for West
Texas Intermediate (WTI) crude oil fell $4.03 last Monday, then closed last
Friday at $23.45 per barrel, or $4.04 per MMBtu.
Prices:
Spot prices trended down significantly in most
markets last week, responding to the combination of reduced demand and high
storage levels. By the end of Thursday's trading (devoted primarily to
arranging for spot gas for delivery through the last three days of September),
prices had fallen from 5 to 15 cents per MMBtu at most locations. With weak demand, and a two and one-half
year low price for a near-month contract of $1.830, Friday's trading session
for the first spot deliveries in the new month fell further. By Friday's close, prices at nearly all
locations tracked by Gas Daily were below $2.00 per MMBtu, with the
exception of some points in the Northeast and Florida citygates served by
Florida Gas Transmission (FGT). While
currently having the highest gas prices in the nation, FGT also experienced
last week's largest price drop as cool, rainy weather in the Florida peninsula
led to a Friday-to-Friday decrease of more than $0.50 to $2.66 per MMBtu. Prices in the Rockies, the San Juan Basin,
and California ran counter to the downward trend. Rockies and San Juan prices rose nearly uniformly throughout the
week, gaining 25-40 cents to around $1.40 and $1.50 per MMBtu,
respectively. In California, prices
slipped a bit mid-week but recovered on Thursday and Friday. Prices in southern California (on SoCAL) and
northern California (on PG&E), at $1.88 and $1.73 per MMBtu, were up about
9 and 6 cents, respectively, for the week.
Futures prices were also down for the week. The October contract price fell more than 19
cents on Monday to $1.910 per MMBtu and became the first near-month contract to
slip below $2 since November 1999. The
October contract expired on Wednesday, September 26, at $1.830 per MMBtu—the
lowest near-month closing price since the April 1999 contract's expiry at
$1.810 on March 29, 1999. The October
contract's final price represents a loss of nearly 25 percent since becoming
the near-month contract on August 30. However, the November contract, on becoming the near-month contract on
Thursday, held its previous day's price at $2.253 per MMBtu, and held up well
on Friday in the face of falling cash prices, ending the week at $2.244 per
MMBtu. All out-month contracts were
down from Friday to Friday, with losses in contracts for deliveries in the next
12 months off around 10 to 20 cents per MMBtu. The price for December delivery fell 21 cents to $2.622 per MMBtu, while
the January and February contracts were down 18 and 16 cents, respectively, to
$2.832.
Spot Prices ($ per MMBTU)-Selected
Trading Centers |
Mon. 9/24 |
Tues. 9/25 |
Wed. 9/26 |
Thur. 9/27 |
Fri. 9/28 |
Henry Hub |
1.99 |
1.95 |
1.90 |
1.90 |
1.84 |
New York citygates |
2.31 |
2.33 |
2.29 |
2.26 |
2.12 |
Chicago citygates |
2.02 |
1.97 |
1.93 |
1.93 |
1.87 |
Northern CA PG&E |
1.80 |
1.80 |
1.79 |
1.70 |
1.73 |
Southern CA (SOCAL) |
1.85 |
1.80 |
1.77 |
1.80 |
1.88 |
Futures (Daily
Settlement, $MMBTU) |
|
|
|
|
|
October Delivery |
1.910 |
1.925 |
1.830 |
expired |
expired |
November Delivery |
2.275 |
2.300 |
2.253 |
2.253 |
2.244 |
December Delivery |
2.660 |
2.690 |
2.633 |
2.624 |
2.622 |
Source: Financial
Times Energy, Gas Daily. |
Storage:
The
estimated additions to underground storage averaged 13 Bcf per day during the
third week of September as the American Gas Association reported that net
injections were 91 Bcf for the week ended Friday, September 21. This estimate
is virtually the same as the previous week's 90 Bcf and brings EIA's estimate
of working gas to 2,884 Bcf. Throughout the spring and summer, the industry has
sustained a robust refill rate and since the end of March has added an
estimated 2,142 Bcf—43 percent above the previous 6-year average and a record
for the period. All three storage regions continue to add to stocks at rates
that exceed their 6-year averages, resulting in steadily increasing surpluses
over their respective 6-year average inventory levels. Estimated storage levels
in the Producing region are 23 percent above its 6-year average. Most storage
facilities are expected to continue to add to stocks during the nearly 6 weeks
remaining in the refill season. Based
on EIA data, net injections have averaged almost 7.4 Bcf per day for this
period over the previous 6 years. If this rate is realized, it would result in
a projected working gas stock level of 3,179 Bcf on November 1—about 244 Bcf
above the 6-year average and 480 Bcf higher than last year's 2,699 Bcf.
All Volumes
in BCF |
Current
Stocks (Fri,9/21) |
Estimated
6-Year (1995-2000) Average |
Percent Difference
from 6 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri,9/14) |
|
East Region |
1,682 |
1,637 |
2.8% |
58 |
1,624 |
|
West Region |
389 |
341 |
14.1% |
8 |
381 |
|
Producing Region |
813 |
661 |
23.0% |
25 |
788 |
|
Total Lower 48 |
2,884 |
2,639 |
9.3% |
91 |
2,793 |
|
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. |
||||||
Summary:
Spot and futures prices continued to trend down, as
seasonal temperatures, growing signs of economic recession, falling oil prices,
and above-average inventories placed steady downward pressure on the market.