The spot price at the Henry Hub finished the abbreviated trading week on Wednesday, November 21 at $1.91 per MMBtu, roughly 22 cents or 13 percent over the previous Friday. On the NYMEX, the settlement price of the futures contract for December delivery at the Henry Hub settled at $2.813 per MMBtu, up roughly 18 cents over the previous Friday. Market prices were affected early in the week by the expectation of colder weather , and then on Wednesday–the end of trading for the week–by mild temperatures that prevailed throughout much of the country. (Temperature Map) (Temperature Deviation Map) The spot price for West Texas Intermediate (WTI) crude oil increased by nearly 2 percent, climbing to $18.38 per barrel or $3.17 per MMBtu.

Prices:

Spot prices at many locations throughout the country climbed early in the week as seasonal temperatures appeared in parts of the Midwest and Northeast for several days early in the week. Prices rose at every market location throughout the country, with increases on Monday ranging from 30 to 65 cents per MMBtu at most points. On Tuesday, the increases continued, mostly in the range of 40-65 cents, resulting in cumulative gains of $1 per MMBtu or more at over 50 percent of pricing locations in all markets, with the two-day increases equaling or exceeding the cumulative declines of the previous week. Mild temperatures and light demand reversed much of the increase in spot prices as trading for the week ended early heading into the holiday weekend, however, prices finished the week up at many market locations. The spot price at the Henry Hub climbed to $2.55 per MMBtu on Tuesday, and finished the week at $1.91 per MMBtu, roughly 18 cents or 13 percent over the previous Friday. Despite the increases last week, spot prices at the Henry Hub remained at levels closely approximating the prices for the same report week in 1999, and were about 70 percent below the prices that prevailed last year at this time.

At the NYMEX, the settlement price of the futures contract for December delivery at the Henry Hub also climbed early in the week before declining on Wednesday to end the week at $2.813 per MMBtu, up almost 18 cents or 7 percent over the previous Friday. In contrast to the Henry Hub spot price, which varied in a range of about $1.17 per MMBtu during the shortened week, the settlement price of the December contract varied in a tight range of only about 22 cents per MMBtu. On Wednesday, the settlement price for the December contract declined only about 5 cents despite the report of net injections for the week ended November 16, and the upward revision to the net injections reported in the storage report of the previous week. This uncharacteristic unresponsiveness of the settlement price to a bearish storage report tends to indicate that the market does not expect the current level of spot prices to continue throughout next month. The contract for December delivery expires on Wednesday, November 28.

Spot Prices ($ per MMBTU)-Selected Trading Centers	Mon. 11/19	Tues. 11/20	Wed. 11/21	Thur. 11/22	Fri. 11/23
Futures (Daily Settlement, $MMBTU)
December Delivery	2.791	2.852	2.813	Holiday	Closed
January Delivery	2.996	3.041	2.991	Holiday	Closed
Source: Reuters Information Service

Storage:

Net injections into working gas storage were 15 billion cubic feet (Bcf) during the week ended Friday, November 16, according to the most recent American Gas Association (AGA) estimates. This is the first time in the 8-year history of AGA weekly data collection that total net additions occurred during this week, and it stands in marked contrast to the 94 Bcf drawdown this time last year. In addition, the AGA revised its storage estimates upward for the prior week (ended Friday, November 9), reporting that the Consuming East region had net injections of 10 Bcf instead of zero, which increased the total net injections for that week from 7 to 17 Bcf. Estimated cumulative additions through November 16, 2001, were 35 Bcf, while severe cold temperatures last year resulted in a net withdrawal of 71 Bcf during the first 16 days of November 2000. The continued addition of gas to storage despite the start of the heating season brings working gas levels as of November 16, 2001, to an estimated 3,136 Bcf, which exceeds the volume in storage at this time last year by more than 500 Bcf. (Storage Figure) Working gas inventories by region as of November 16 exceeded normal levels by up to 21.3 percent, while total inventories were over 10 percent above normal for the first time this year.

All Volumes in BCF	Current Stocks (Fri,11/16)	Estimated 6-Year (1995-2000) Average	Percent Difference from 6 Year Average	Net Change from Last Week	One-Week Prior Stocks (Fri,11/9)*
East Region	1,857	1,757	5.7%	0	1,857
West Region	396	357	11.0%	2	394
Producing Region	883	728	21.3%	13	870
Total Lower 48	3,136	2,842	10.3%	15	3,121
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:

Winter weather outlook. In the November 15 update to its Winter Outlook 2001-2002, the National Weather Service (NWS) reiterated its forecast for a repeat of last winter. The forecast, covering the period from December 2001 through February 2002, continues to call for colder-than-normal temperatures throughout most of the northern one-third of the country, despite the unusually warm weather experienced thus far in November, which sharply contrasts with the early-winter frigid temperatures during November 2000. Through November 24, heating-degree days for the nation as a whole were 22 percent less than for the same period last year. Cumulative heating-degree days for all Census Divisions through November 24 ranged from 7 to 40 percent lower than last year at this time. Of the nine Census Divisions, only the South Atlantic had experienced colder-than-normal temperatures through November 24. Nonetheless, the NWS’s revised Winter Outlook still foresees a winter with sharp swings in temperature and precipitation, with heavy lake-effect snows in the Midwest and Northeast, cold snaps in the South, and potential for Nor’easters along the East Coast.

Gas drilling activity. Rigs drilling for natural gas numbered 814 according to the Baker-Hughes rig count report released on Wednesday, November 21. This is a decline of 6 rigs, or roughly 1 percent from the prior week. Since reaching its record-setting peak of 1,068 rigs during the week ended July 13, 2001, rigs drilling for gas have declined at an average weekly rate of roughly 1.3 percent. As a result of this steady decline in rig counts, during the week ended November 9, the number of rigs drilling for natural gas slipped below the level recorded during the same report week in the previous year for the first time since September 1999. Rig counts have remained below this threshold for three straight weeks. The rig count is almost 1 percent below the level recorded during the same week last year, and a little over 2 percent below the average number of gas rigs since 2000. Natural gas supplies are expected to be more than adequate for the upcoming winter, however; continued declines in drilling for natural gas prospects could jeopardize gas supplies in the longer-term.

Summary:

Spot prices ended the abbreviated holiday week on Wednesday up over the previous Friday in a week marked by significant variability. Nevertheless, spot prices were almost 70 percent lower than last year at this time, closely approximating the levels that prevailed during November 1999. On the NYMEX, the settlement price of the futures contract for December delivery also climbed during the week. As of the Thanksgiving weekend, the storage report has yet to show a week with a net withdrawal during the current heating season. Rig counts continued to decline, and are now below the average number of rigs since 2000. The futures contract for December delivery is scheduled to expire on Wednesday, November 28.