for week ending January 06, 2002 | Release date: January 07, 2002 | Previous weeks
The spot price at the Henry Hub finished the trading week on January 4
at $2.36 per MMBtu, roughly 30 cents or over 11 percent less than on the
previous Friday. On the NYMEX, the
settlement price of the futures contract for February delivery at the Henry Hub
settled at $2.275 per MMBtu, down nearly 50 cents from the previous
Friday. Market prices were affected
early in the week by colder temperatures in most of the eastern two-thirds of
the United States. (See Temperature Map) (See Deviation Map) Although again smaller than historical averages and market
expectations, withdrawals from storage at 124 Bcf were the largest reported so
far during the current heating season. The spot price for West Texas
Intermediate (WTI) crude oil increased by over 1 percent, climbing to $21.47
per barrel or $3.70 per MMBtu.
Prices:
Spot prices at most major
market locations began the week higher on Monday, December 31 than the previous
Friday, but declined in each trading day last week after the market reopened on
Wednesday, January 2. Wintry weather
that enveloped much of the eastern two-thirds of the country contributed to price
increases between 5 and 20 cents per MMBtu
on Monday, December 31. The higher spot prices
resulted in the Henry Hub spot price exceeding the settlement price of the
futures contract for February delivery. The amount by which the spot
price exceeded the February delivery price ranged from 10.5 to 23.3 cents per
MMBtu last week until decreasing to under 9 cents on Friday. This price pattern suggests that market
participants expect prices to decline over the rest of the winter, because
supplies remain quite substantial, with more than 600 Bcf in storage above the
normal level for this time of year. On
Wednesday, January 2, the first day of trading in the New Year, spot prices
declined by 15 to 30 cents per MMBtu at nearly all major market locations, more
than offsetting the 5- to 20-cent rise on Monday. Prices declined the rest of the week, reaching the levels that
prevailed in December before the holidays and the ensuing wintry weather. If storage continues to dominate market
pricing, prices are likely to remain relatively low throughout the remainder of
the winter.
At the NYMEX, the settlement price of the futures
contract for February delivery declined throughout the week from the $2.774 per
MMBtu recorded on Friday, December 28. Short selling the February and March delivery contracts appears to have
been the predominant feature of the futures market last week as traders appear
to be expecting prices to decline. This put downward pressure on
the settlement prices of the futures contracts for delivery in February and
March. Although the net storage
withdrawal reported for the week ended December 28 was the closest to normal
yet this season, prices fell on Thursday, January 3, and ended the week nearly
50 cents lower than on the previous Friday.
Spot Prices ($ per MMBtu) |
Mon. 12/31 |
Tues. 1/01 |
Wed. 1/02 |
Thurs. 1/03 |
Fri. 1/04 |
Henry Hub |
2.75 |
2.75 |
2.57 |
2.50 |
2.36 |
New York citygates |
4.93 |
4.93 |
4.88 |
4.48 |
3.17 |
Chicago citygate |
2.71 |
2.71 |
2.50 |
2.42 |
2.31 |
PG&E citygate |
2.66 |
2.66 |
2.42 |
2.36 |
2.22 |
So. Cal. Border Avg. |
2.60 |
2.60 |
2.37 |
2.34 |
2.22 |
Futures ($/MMBtu) |
|
|
|
|
|
February delivery |
2.570 |
holiday |
2.465 |
2.268 |
2.275 |
March delivery |
2.560 |
holiday |
2.441 |
2.263 |
2.265 |
Source: NGI's
Daily Gas Price Index (http://intelligencepress.com) |
Storage:
Net storage withdrawals were 124 Bcf for the week
ended Friday, December 28, according to the American Gas Association
(AGA). This is 17 percent less than the
6-year (1995-2000) average of net withdrawals for this week. As of December 28, the EIA-estimated balance
of 2,903 Bcf in inventories is 26.4 percent above the EIA 6-year average for
this point in the year, and over 1,100 Bcf greater than at this time last
year. Net withdrawals in each of the
three regions were significantly less than their respective 6-year averages,
causing the surplus with respect to their average inventory levels to grow for
the ninth consecutive week in the East and Producing regions and in the nation
as a whole. With a net withdrawal that
was 23 percent less than average, Producing region stocks stood at over one and
one-half times their 6-year average. (See
Storage Figure)
All Volumes
in BCF |
Current
Stocks (Fri,12/28) |
Estimated
6-Year (1995-2000) Average* |
Percent
Difference from 6 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri,12/21) |
|
East Region |
1,699 |
1,414 |
20.2% |
-84 |
1,783 |
|
West Region |
334 |
304 |
10.0% |
-12 |
346 |
|
Producing Region |
869 |
578 |
50.4% |
-28 |
897 |
|
Total Lower 48 |
2,903 |
2,296 |
26.4% |
-124 |
3,027 |
|
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.
*Revised to incorporate revisions to EIA monthly survey data for various months
in 1999-2000. |
||||||
Other Market Trends:
The Energy Information Administration has updated
its web site regarding the status of retail competition for residential natural
gas consumers in each state as of December 2001 (http://www.eia.doe.gov/oil_gas/natural_gas/restructure/restructure.html).
California's energy crisis and the record high gas prices last winter have
slowed the move toward increased competition in retail natural gas markets. In
fact, some states have chosen not to expand pilot program or have deferred
legislative action until new questions concerning reliability and costs can be
resolved. Still, as of December 2001, 20 states and the District of Columbia
have programs underway that allow residential consumers and other small‑volume
gas users to purchase natural gas from someone other than their traditional
utility company. Five states and D.C. allow all residential consumers to choose
their natural gas suppliers, but a lack of marketer participation has precluded
the development of competitive retail markets in two of these states. Seven
other states have begun to implement statewide programs, and eight states have
pilot or partial unbundling programs in place. An additional 10 states are
considering action on customer choice. The states with the largest number of
participants in customer choice programs are Georgia (1,375,550), Ohio
(825,148), Pennsylvania (253,734), and New York (244,823).
Summary:
After an increase on Monday, the Henry Hub spot
price declined throughout the remainder of the week, and closed at $2.36 per
MMBtu on Friday, January 4, down 30 cents from the previous Friday. The price of the futures contract for
February delivery at the Henry Hub settled at $2.75 per million Btu on Friday,
nearly 50 cents less than the previous Friday. At 124 Bcf, withdrawals from storage were again small relative to
historical averages, and working gas in storage remains more than 1,100 Bcf
above last year's level.