for week ending October 8, 2001 | Release date: October 9, 2001 | Previous weeks
After beginning last week
down on Monday (10/1), spot prices at the Henry Hub moved up and peaked on
Thursday before declining slightly to end trading last week at $2.12 per MMBtu-almost
$0.30 higher than the previous Friday. At the NYMEX futures market, the
settlement price for November delivery of natural gas moved up most days before
dropping by almost $0.19 per MMBtu on Friday to end the week down from the
previous Friday. Both the spot and futures markets were open on Columbus Day
(10/8) and the downward trend at the Henry Hub continued as spot prices were
reported to be $2.04 per MMBtu, while on the NYMEX the November contract gained
over 4 cents. A key influence on prices last week seems to have been the
weather.Cool weather moved into the
Midwest on Wednesday affecting most markets in the eastern two-thirds of the
country, and warm temperatures were a prime contributor in California (See Temperature Map) (See Deviation Map)Net additions to storage slowed to an estimated daily average
of9.4 Bcf per day. This rate remains
close to the average 10 Bcf per day for that week during the previous 6 years.
The price of West Texas Intermediate (WTI) crude oil continued to trend down
most days and ended trading on Friday at $22.40 per barrel, or $3.86 per MMBtu.
Prices:
Spot prices at most major market locations trended
up most days last week similar to price movement at the Henry Hub. Prices moved
down on both Friday (10/5) and Monday (10/8) as weather forecasts for this week
were calling for a return to normal seasonal temperatures in most parts of the
country.Several of the regional markets
recorded price increases from Friday to Friday that were between $0.20 and
$0.30 per MMBtu. In the Rockies, where prices were below $1.00 per MMBtu two
weeks earlier, spot gas traded on Friday at $1.65. In southern California,
prices at the citygate moved above $2.00 per MMBtu for the first time in 2
weeks, while prices in Chicago and New York City also moved up $0.30 and $0.35,
respectively, from the previous Friday.
The NYMEX futures contract for November delivery
ended trading last week at $2.227 per MMBtu—down about 2 cents from a week
earlier. On Monday, the November price rose to $2.270, yet all contracts
covering the upcoming heating season (November to March) continued to trade
well below $3.00 per MMBtu. These contracts settled on Monday with December at
$2.647,March at $2.808,and January recording the highest price for
the period at $2.855 per MMBtu. Last year at this time these contracts were
trading at $5.008 for November 2000 and $4.658 for March 2001 with the December
contract topping the period at $5.113 per MMBtu.
Spot Prices ($ per MMBTU)-Selected
Trading Centers |
Mon. 10/01 |
Tues. 10/02 |
Wed. 10/03 |
Thur. 10/04 |
Fri.10/05 |
Mon10/08 |
||
Henry Hub |
1.77 |
1.82 |
1.98 |
2.13 |
2.12 |
2.04 |
||
New York citygates |
2.02 |
2.05 |
2.26 |
2.42 |
2.47 |
2.41 |
||
Chicago citygates |
1.77 |
1.82 |
2.05 |
2.18 |
2.17 |
2.02 |
||
Northern CA PG&E |
1.70 |
1.81 |
1.93 |
2.03 |
1.79 |
1.82 |
||
Southern CA (SOCAL) |
1.87 |
1.80 |
1.96 |
2.13 |
2.02 |
1.92 |
||
Futures (Daily
Settlement, $MMBTU) |
|
|
|
|
|
|
||
November Delivery |
2.208 |
2.268 |
2.320 |
2.414 |
2.227 |
2.27 |
||
December Delivery |
2.602 |
2.660 |
2.688 |
2.770 |
2.617 |
2.65 |
||
Storage:
Net injections of natural gas into storage were 66
billion cubic feet (Bcf) for the week ended September 28, 2001 according to the
American Gas Association (AGA).At 9.4 Bcf
per day, the rate at which working gas was injected into storage declined just
over 27 percent from the previous week and just over 15 percent compared with
the same week last year.Working gas in
storage remains well ahead of historical levels (See Storage Figure).If the rate of injections through the
remainder of the refill season matches the 6-year average, working gas in
storage will be 3,153 Bcf.The
slowdown of injections into storage was most apparent in the Producing Region
where the 13 Bcf injected last week is the third lowest figure reported for the
report week in the 8-year history of AGA data, and is 48 percent less than the
fill reported last year.The West
Region on the other hand matched the highest weekly injection for the report
week in the AGA data series, and doubled last year's injections.Injections in the East region seemed fairly
typical for the report week:47 Bcf
injected into storage last week compared with a 6-year average of 46 Bcf for
the same week.
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 |
1,725 |
1,684 |
2.4% |
47 |
1,678 |
|||
West Region |
378 |
346 |
9.3% |
6 |
372 |
|||
Producing Region |
823 |
678 |
21.3% |
13 |
810 |
|||
Total Lower 48 |
2,926 |
2,708 |
8.1% |
66 |
2,860 |
|||
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:
The U.S. Coast Guard as a result of the heightened state of national security following last month's attacks has suspended liquefied natural gas (LNG) shipments into Boston harbor. Last year the Boston facility received 45 shipments totaling 99 Bcf.
In the EIA article, Winter Fuels Outlook: 2001/2002 (October 2001) a significant decline in natural gas prices is projected for the upcoming winter compared to last year. Wellhead prices are expected to average $2.21 per MMBtu for this winter—almost 62 percent less than last year's average of $5.78. Several factors account for this sharp drop including the assumed return to normal winter temperatures, above-average working gas stock levels, and reduced demand from a slowdown in the U.S. economy. (The complete report is available on the EIA Web Site at:
http://www.eia.doe.gov/emeu/steo/pub/special/win2001/winfuel.html
Summary:
Cool temperatures in the Midwest and warm weather in California
contributed to price increases last week. The stock build slowed but the
working gas level continues to be 9 percent above average. Projected wellhead
prices during the upcoming winter are forecasted to be more than 60 percent
below last year.