for week ending February 3, 2002 | Release date: February 4, 2002 | Previous weeks
At the Henry Hub, the spot
price surged 10 cents on Wednesday followed by 6-cent increases on both
Thursday and Friday, and ended trading Friday at $2.20 per MMBtu, up 16 cents from
the previous Friday. Although prices rose, they remain well below levels that
prevailed through most of January. Cash
prices moved higher primarily on the strength of the winter's most extensive
storm to date. The rapidly moving front
barreled through the country's midsection at midweek, bringing plunging
temperatures from Kansas and Oklahoma northeastward through Ohio and into
upstate New York. Meanwhile,
record-setting date-specific high temperatures were being recorded at numerous
locations in the Southeast and Mid-Atlantic States, with reports of air
conditioners being turned on in southern Texas, Louisiana, and Florida. (See
Temperature Map) (See
Deviation Map) On the NYMEX, owing to an afternoon
mini-rally of short covering on its last day of trading, the expiring
near-month futures contract (February delivery) barely managed to end trading
above $2, closing out at $2.006 per MMBtu on Tuesday, January 29. The futures contract for March delivery,
which became the near-month contract on Wednesday, promptly notched 2 days of
modest increases and ended the week at $2.138 per MMBtu. The spot price of West Texas Intermediate
crude oil traded in a narrow, sub-$1 range all week, and finished the week just
60 cents higher than the previous Friday, at $20.40 per barrel, or $3.52 per
MMBtu.
Prices:
Spot
prices were generally flat to slightly down through Tuesday at most market
locations, but surged on Wednesday as the winter's strongest storm to date
pushed further into the Midcontinent and Midwest. Wednesday's increases ranged from 5 to 16 cents at every market
location tracked by Natural Gas Intelligence. And even though the storm was fast-moving and short-lived, cash prices
for the rest of the week tended to continue to move up, leading to
Friday-to-Friday gains in the range of 5 to 20 cents at most market
locations. Price increases were even
seen in the Southeast, mid-Atlantic and parts of the Northeast–areas not only
untouched by the storm, but also experiencing daily average temperatures that
exceeded normal by double digits right through Friday. Some of the price strength in these markets
was attributed to short covering by participants who had entered the new month
with short supply positions, and also to end-of-month balancing. Another factor, at least for the
mid-Atlantic and the more southerly parts of the Northeast, was the forecast
for drastically falling temperatures over the weekend. The Transco Zone 6 spot price for delivery
to New York citygates increased by 32 cents from the previous Friday, to $2.59
per MMBtu. The West experienced its
third week in a row of frigid, sub-normal temperatures. PG&E reported a near-record send out of
gas on Tuesday of just less than 4 Bcf. The PG&E citygate price increased by 12 cents from the previous
Friday, to $2.25 per MMBtu, while the Southern California border average price
was up by a dime to $2.17. Price
increases in California have been kept in check by large storage withdrawals
during this recent cold snap.
On the NYMEX, the February
contract gained almost 10 cents on its last trading day (Tuesday, January 29)
to settle at $2.006, barely pulling back up above $2 per MMBtu. Over the course of its tenure as the
near-month contract since December 28, the February contract fell by $0.768 per
MMBtu, or nearly 28 percent. Beginning
as the near-month contract on Wednesday, the futures contract for March
delivery had small gains to end the week at $2.138 per MMBtu, an increase of
$0.034 from the preceding Friday. For
the week (Friday-to-Friday), only the March and April contracts showed
gains. The out-month contracts through
the end of 2002 fell by as much as 5 cents, with all contracts through October
settling below $2.50 per MMBtu. The highest
priced futures contract for 2002 was for December delivery, which settled on
Friday at $2.894.
Spot Prices ($ per MMBtu) |
Mon. |
Tues. |
Wed. |
Thurs. |
Fri. |
28-Jan |
29-Jan |
30-Jan |
31-Jan |
1-Feb |
|
Henry Hub |
2.02 |
1.98 |
2.08 |
2.14 |
2.20 |
New York citygates |
2.30 |
2.31 |
2.42 |
2.42 |
2.59 |
Chicago citygate |
2.02 |
1.99 |
2.10 |
2.16 |
2.19 |
PG&E citygate |
2.15 |
2.15 |
2.22 |
2.25 |
2.25 |
So. Cal. Border Avg. |
2.07 |
2.07 |
2.16 |
2.19 |
2.17 |
Futures ($/MMBtu) |
|
|
|
|
|
February delivery |
1.908 |
2.006 |
Expired |
Expired |
Expired |
March delivery |
1.984 |
2.067 |
2.080 |
2.138 |
2.138 |
April delivery |
|
|
2.147 |
2.190 |
2.198 |
Source: NGI's
Daily Gas Price Index (http://intelligencepress.com) |
Storage:
Net withdrawals for the week ended Friday, January
25, were 111 Bcf according to the American Gas Association (AGA). All regions reported
net withdrawals for the week with the Consuming East again reporting the
majority of the drawdown with 69 Bcf removed from storage. This was the fifth
consecutive week in which estimated weekly withdrawals exceeded 100 Bcf and
brought cumulative net withdrawals this January to 480 Bcf with almost one full
week of additional activity remaining in the month. Net withdrawals in January 2001 were 467 Bcf. Even with the
larger withdrawals this January, the level of working gas on hand remains more
than 1,000 Bcf higher than last year at this time and 607 Bcf above the
previous 6-year average. (See Storage Figure)
All Volumes
in Bcf |
Current
Stocks (Fri,1/25) |
Estimated
6-Year (1995-2000) Average* |
Percent Difference
from 6 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri,1/18) |
|
East Region |
1,344 |
1,043 |
29% |
-69 |
1,413 |
|
West Region |
280 |
250 |
12% |
-19 |
299 |
|
Producing
Region |
716 |
441 |
62% |
-23 |
739 |
|
Total Lower
48 |
2,341 |
1,734 |
35% |
-111 |
2,452 |
|
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:
Commitments of
Traders. The Commitments of Traders
Report released on Friday, February 1 by the Commodities Futures Trading
Commission (CFTC) showed that non-commercial speculators (i.e., traders without
a direct connection to the natural gas industry or markets) reduced their net
short position by 14,213 contracts to 48,430 during the week ended Tuesday,
January 29. Their net short position
had grown steadily since December 21, 2001, and by January 22 had more than
doubled to the record level of 62,643 contracts. Their current net short position of 48,430 contracts is still a
relatively high level. Conversely, the
net long position of commercial traders (i.e., firms engaged in business
activities in the industry hedged by the use of the futures or options markets)
also grew rapidly through January 22, climbing to 58,174 from 21,358 contracts
on December 21, 2001. Commercial
traders reduced their net long position by 14,388 contracts to 43,786 during
the week ended January 29. The
difference in the net positions of each group of traders likely reflects their
different motives. The net short
position for non-commercial traders is consistent with an expectation that
prices will decline further. However, commercial traders likely are willing to
enter into contracts at present prices to minimize price risk. Prices are
unusually low for this time of year and further movement may be considered
uncertain to an unacceptable degree.
Summary:
The winter's first significant storm sent cash
prices slightly higher last week. The
prices of the near-month and second month NYMEX futures contracts rose
slightly, while all others declined. The large inventory surplus is likely to exert ever more downward
pressure on prices as the remaining weeks of winter begin to dwindle.