for week ending December 16, 2001 | Release date: December 17, 2001 | Previous weeks
Overview:
The spot price at the Henry
Hub finished the trading week on December 14 at $2.41 per MMBtu, roughly 30
cents or 14 percent over the previous Friday.On the NYMEX, the settlement price of the futures contract for January
delivery at the Henry Hub settled at $2.846 per MMBtu, up nearly 28 cents over
the previous Friday.Market prices were
affected early in the week by colder weather, and then by milder temperatures
that prevailed after Tuesday. (Temperature
Map) (Temperature
Deviation Map). At 22 Bcf, withdrawals from
storage were again much smaller than historical averages. The spot price for
West Texas Intermediate (WTI) crude oil increased by over 1 percent, climbing
to $19.31 per barrel or $3.33 per MMBtu.
Prices:
Continuing the rally that began
on Friday, December 7, spot prices climbed early in the week at many major
market locations as more seasonal temperatures moved into the Midwest and
Northeast.With plentiful supplies and
normal levels of demand, the market did not appear poised for a price
rally.However, prices rose between 15
and 30 cents per million Btu at the Southern California border, PG&E
citygates, the Henry Hub, and the New York and Chicago citygates before
declining on Wednesday.A number of
related factors likely account for the price run-up.The settlement price of the futures contract for next month
delivery at the Henry Hub has been nearly 48 cents greater than the Henry Hub
spot price on average since November 2001.This gives suppliers an incentive to purchase gas on the spot market at
today's relatively low prices instead of withdrawing gas from storage that
could be available next month when higher prices are expected.Suppliers paid significantly higher prices
for the natural gas they injected into storage during the summer than the
current prevailing spot prices.The low
current prices would discourage suppliers from withdrawing gas from storage to
sell at a loss when relatively cheap gas is available on the spot market.Additionally, despite a warm fall, suppliers
continue to expect a colder-than-normal winter that should cause increasing
prices in January.As warming
temperatures eased the temporary increase in incremental demand, prices
declined in all markets on Wednesday and Thursday, and in many locations on
Friday as well.Nonetheless, prices at
many market locations ended the week up over the previous Friday with the Henry
Hub spot price 30 cents higher than the previous Friday.
At the NYMEX, the settlement price of the futures contracts for winter months' delivery at the Henry Hub followed a somewhat similar pattern as the spot price, climbing early in the week before declining 7 to 8 cents on Wednesday, December 12.Bouncing back from Wednesday's decline and another weak AGA withdrawal report, the price of the near-month contract (January delivery) gained nearly 4 cents on Thursday when the National Weather Service (NWS) released its latest 30 and 90 day outlooks.The NWS is projecting colder-than-normal temperatures through March 2002 for the Northeast, Midwest, and Great Lakes regions.The price of the January contract finished the week up nearly 28 cents over the previous Friday.
Spot Prices ($ per MMBTU)-Selected
Trading Centers |
Mon.12/10 |
Tue. 12/11 |
Wed. 12/12 |
Thur. 12/13 |
Fri.12/14 |
Henry Hub |
2.33 |
2.55 |
2.49 |
2.41 |
2.41 |
New York citygates |
2.75 |
2.96 |
2.79 |
2.70 |
2.77 |
Chicago citygates |
2.35 |
2.57 |
2.50 |
2.44 |
2.42 |
PG&E Citygates |
2.68 |
2.93 |
2.92 |
2.97 |
2.90 |
Southern California
Bdr. Average |
2.51 |
2.73 |
2.72 |
2.69 |
2.69 |
Futures (Daily
Settlement, $MMBTU) |
|
|
|
|
|
January Delivery |
2.747 |
2.803 |
2.719 |
2.756 |
2.846 |
February Delivery |
2.827 |
2.868 |
2.793 |
2.822 |
2.908 |
Source: NGI's
Daily Gas Price Index (http://intelligencepress.com) |
Storage:
Net withdrawals from storage for the
week ended Friday, December 7, were 22 billion cubic feet (Bcf), according to
the American Gas Association (AGA).Total stocks were an estimated 3,118 Bcf, which is more than 800 Bcf
above the working gas volume at this time last year.The net withdrawal of 22 Bcf is 69 percent below the 6-year
average for the week.Although total
stocks declined for the second consecutive week, the Producing region reported
net injections of 4 Bcf, thereby extending its unprecedented run of net
injections during the heating season to a fifth consecutive week.The 6-year (1995-2000) average storage
activity for this week in the Producing region is a net withdrawal of 19
Bcf.By contrast, net withdrawals in
the West region were once again significantly above average, being almost
double the 6-year average of 9 Bcf.In
fact, West region net withdrawals were the highest for this week of the heating
season in the 8-year history of AGA data.
Unusually warm temperatures in most of the country
have provided little impetus for storage withdrawals.According to NWS data, during the week of the latest AGA storage
report, the number of heating degree days (weighted by gas home-heating
customers) ranged from 6 to nearly 60 percent less than normal in the nine
Census Divisions.For the Nation as a
whole, heating degree-days were 37 percent less than normal. (Storage Figure)
All Volumes
in BCF |
Current
Stocks (Fri,12/7) |
Estimated
6-Year (1995-2000) Average |
Percent Difference
from 6 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri,11/30)* |
|
East Region |
1,841 |
1,639 |
12.4% |
-10 |
1,851 |
|
West Region |
366 |
348 |
5.1% |
-16 |
382 |
|
Producing Region |
911 |
675 |
34.9% |
4 |
907 |
|
Total Lower 48 |
3,118 |
2,662 |
17.1% |
-22 |
3,140 |
|
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:
After significant increases early in the week, the
Henry Hub spot price declined throughout the remainder of the week, yet closed at
$2.41 per million Btu on Friday, December 14, up 30 cents over the previous
Friday.The price of the futures
contract for January delivery at the Henry Hub settled at $2.846 per million
Btu, nearly 28 cents over the previous Friday's price.At 22 Bcf, withdrawals from storage were
again small relative to historical averages.This pattern of relatively small net withdrawals from storage likely
will continue as the basis differential between the spot price and the
near-month futures contract price continues to be positive and relatively
significant.