for week ending October 21, 2001 | Release date: October 22, 2001 | Previous weeks
The spot price at the Henry Hub finished the week at
$2.34 per MMBtu, or just 3 cents above its level the previous Friday.On the NYMEX, the futures contract for
November delivery ended the week over a quarter of a dollar higher than the
previous Friday, at $2.681 per MMBtu. Despite a brief 2-day cold snap,
temperatures across the Lower 48 States were relatively mild. Although some
unseasonably cooler temperatures were seen from the Gulf Coast into the Mid-continent,
even there average temperatures for the week generally were 50 degrees or more.
(See Temperature Map) (See Deviation Map) On October 12 the Coast
Guard lifted the ban on liquefied natural gas (LNG) tankers' use of Boston
harbor to reach Distrigas of Massachusetts' import facility, helping to
alleviate concerns about winter supply in New England.The spot price for West Texas Intermediate
(WTI) crude oil fell by 10 percent on Tuesday, October 16, dropping to $20.05
per barrel. By Friday, WTI had recovered two thirds of the decrease, ending the
week at $21.85 per barrel, or $3.77 per MMBtu.
Prices:
In a
week of accentuated volatility, spot prices fluctuated within a 40-cent range,
however Friday-to-Friday price gains were limited to just a few cents in most
markets. Losses of a few pennies to 16 cents were recorded primarily in the
Permian and San Juan basins, the Rockies, and California.At the Henry Hub, cumulative increases of
$0.39 per MMBtu from Monday to Wednesday lifted the spot price to $2.65 per
MMBtu—its highest level in 7 weeks. Likewise, some market locations serving the
Northeast saw spot prices climb past the $3.00 mark for the first time since
late August 2001, while the average price in the Rockies jumped to $2.24 per
MMBtu, up 28 cents from the previous Friday.Major factors that helped bolster prices at mid week were a cold front
that moved into the Midwest on Tuesday bringing cooler temperatures all the way
down into Texas, Tuesday's release of the Salomon Smith Barney (SSB) forecast
for a colder-than-normal winter, and rumors that the federal government might
shut down nuclear-powered electricity generating plants that do not meet
security requirements.However, the
rally was all but undone by the relatively large American Gas Association (AGA)
injection estimate announced on Wednesday, the lack of strong demand owing to
continuing weakness in the economy, the return of mild temperatures on Friday,
and forecasts for further warming on the weekend.By week's end, Friday-to-Friday changes in average spot prices
ranged from minus to plus 11 cents, with average prices of $1.86 per MMBtu in
the Rockies, $2.24 in Louisiana-Onshore South, and $2.54 in Appalachia.
For the
week, the slump in futures prices on Wednesday, brought on by a
higher-than-expected stock build report from AGA, was just a temporary setback
in a rising trend fueled primarily by colder-than-normal winter outlooks from
both SSB and the National Weather Service (NWS).NWS's Thursday release of its latest 6-10 day outlook for
colder-than-normal temperatures in the Midwest and Northeast added to the
impact of its winter outlook. Thus, despite Wednesday's over 17-cent drop after
the AGA data release, on Friday the futures contract for November delivery
settled at $2.681 per MMBtu, a gain of $0.251 for the week.This was the first time in nearly 2 months
that a near-month contract settled above $2.60.Likewise, settlement prices for all out-month contracts through
November 2002 showed weekly gains of around 25 cents, as the January through
October contracts climbed back above $3 per MMBtu.The futures contract for December delivery just missed this
threshold, settling on Friday at $2.990.
Spot Prices ($ per MMBTU)-Selected
Trading Centers |
Mon. 10/15 |
Tues. 10/16 |
Wed. 10/17 |
Thur. 10/18 |
Fri.10/19 |
Henry Hub |
2.26 |
2.51 |
2.65 |
2.40 |
2.34 |
New York citygates |
2.48 |
2.85 |
3.05 |
2.69 |
2.57 |
Chicago citygates |
2.29 |
2.51 |
2.68 |
2.42 |
2.35 |
Northern CA PG&E |
2.12 |
2.38 |
2.60 |
2.35 |
2.02 |
Southern CA (SOCAL) |
2.24 |
2.41 |
2.60 |
2.34 |
2.17 |
Futures (Daily
Settlement, $MMBTU) |
|
|
|
|
|
November Delivery |
2.378 |
2.592 |
2.418 |
2.486 |
2.681 |
December Delivery |
2.660 |
2.852 |
2.703 |
2.800 |
2.990 |
Source: Financial
Times Energy, Gas Daily. |
Storage:
Net additions to working gas inventories were 63 Bcf
for the week ended Friday, October 12, according to the latest AGA storage
report.With this estimate, total gas
stocks surpassed 3,000 Bcf for the first time since October 1999.The total net injection of 63 Bcf is about
27 percent greater than the 6-year average of AGA injection estimates for this
week. The net injection of 36 Bcf in the East region is very close to the
6-year average of 34 Bcf, while the 15 Bcf injected in the Producing region
exceeds the 6-year average by 36 percent.The net stock build of 12 Bcf in the West region is the largest for this
week in the 8-year AGA data series and is more than double the 6-year
average.It also caused the West
region's storage surplus compared to the 6-year average level to surge into
double digits, as it increased 2.5 percentage points from last week's
measure.The AGA has announced that it
will terminate its weekly gas storage survey with the final release scheduled
for January 2, 2002. (See Storage Figure)
All Volumes
in BCF |
Current
Stocks (Fri,10/12) |
Estimated
6-Year (1995-2000) Average |
Percent
Difference from 6 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri,10/5) |
|
East Region |
1,807 |
1,746 |
3.5% |
36 |
1,771 |
|
West Region |
390 |
353 |
10.6% |
12 |
378 |
|
Producing Region |
857 |
708 |
21.0% |
15 |
842 |
|
Total Lower 48 |
3,054 |
2,807 |
8.8% |
63 |
2,991 |
|
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:
National Weather Service Winter Outlook
In its
October 18 release of its outlook for the coming winter, the National Weather
Service advised the nation to be prepared for another winter more like last
winter than the warmer-than-normal winters of the late 1990s.The NWS points out that in the absence of a
strong El Nino or La Nina climate pattern, the likelihood of highly variable
winter conditions is increased, with "...sharp swings in temperature and precipitation,
including heavy lake-effect snows in the Northeast and Midwest, cold air
outbreaks in the South, and the potential for Nor'easters along the East
Coast." The outlook notes that
colder-than-normal temperatures are expected in three regions with significant
winter natural gas consumption—the Northeast, the upper Midwest and Great
Lakes, and the northern Great Plains and Rockies.
According to the latest release by the Bureau of
Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U)
increased by 0.4 percent at a seasonally-adjusted annual rate (SAAR) in the
month of September, following a 0.1 percent increase in August.While the BLS's special index for
petroleum-based energy rose 8.0 percent in September, the index's cumulative
change for the 9 months through September 2001 was a decline of 1.7
percent.For the category of "Gas
(piped) and electricity," the September change (SAAR) was a 2.2 percent
decline, and the 6-month change through September 2001 was a decline of 7.6
percent.
Summary:
Spot and futures prices, marked by increased
volatility, ended the week moving in opposite directions.Spot prices moved lower in light of ample
inventories, secure supply, and a lack of demand strength.Futures prices increased on the strength of
both near- and long-term outlooks for colder-than-normal temperatures.