for week ending February 24, 2002 | Release date: February 25, 2002 | Previous weeks
Natural gas prices generally
increased last week. At the Henry Hub, spot prices moved up $0.22 compared with
the previous Friday and ended the week at $2.40 per MMBtu. Contributing to this
increase was the latest National Weather Service ( NWS) 6- to 10- day forecast,
which calls for lower temperatures to arrive this week in most of the eastern
two-thirds of the country. (See
Temperature Map) (See Deviation Map) There is an upward price
trend on the NYMEX futures market also as the March contract gained over $0.24
during last week's holiday-shortened trading to settle on Friday at $2.449 per
MMBtu. Net storage withdrawals exceeded 100 Bcf during the second week of
February, but stocks remain over 90 percent higher than last year at this time.
The spot price of West Texas Intermediate (WTI) declined $0.55 to end the week
at $20.92 per barrel or $3.60 per MMBtu.
Prices:
Prices last week increased
to levels between $2.10 and $2.40 per MMBtu at most major spot markets outside
the Northeast and Midwest. Many market observers expect that last week's
increases will be short-lived in the face of existing market fundamentals,
which include a warmer-than-normal winter, a sluggish U.S. economy, and above
average stock levels of natural gas. The expected arrival of some colder than
normal weather this week in many parts of the country will in all likelihood be
too late to have a significant impact on markets during this winter heating
season. Thus far this winter, according to the NWS, gas-weighted heating
degree-days (HDD) are over 15 percent below normal compared with last winter,
which was close to 6 percent higher than normal HDDs between November 2000 and
February 2001.
On the NYMEX futures market, the
daily settlement price for the March contract reached $2.449 per MMBtu on
Friday, February 22, a near-month price level last seen in early January in
trading for the February contract. The February contract moved down during the
last half of January to close at $2.006
per MMBtu. The March contract, which closes on Tuesday, February 26, closed
last year at $4.998 per MMBtu.
Spot Prices ($ per MMBtu) |
Mon. |
Tues. |
Wed. |
Thurs. |
Fri. |
18-Feb |
19-Feb |
20-Feb |
21-Feb |
22-Feb |
|
Henry Hub |
2.18 |
2.31 |
2.43 |
2.39 |
2.40 |
New York citygates |
2.56 |
2.58 |
2.70 |
2.64 |
2.64 |
Chicago citygate |
2.17 |
2.30 |
2.45 |
2.42 |
2.42 |
PG&E citygate |
2.27 |
2.40 |
2.51 |
2.38 |
2.33 |
So. Cal. Border Avg. |
2.19 |
2.30 |
2.42 |
2.33 |
2.20 |
Futures ($/MMBtu) |
|
|
|
|
|
March delivery |
holiday |
2.397 |
2.385 |
2.425 |
2.449 |
April delivery |
holiday |
2.427 |
2.413 |
2.455 |
2.491 |
Source: NGI's
Daily Gas Price Index (http://intelligencepress.com) |
Storage:
According to the American Gas Association, net
storage withdrawals for the week ended Friday, February 15 were estimated to have
been 112 Bcf, which is 44 Bcf lower than the previous week. The heavily
populated East Consuming region again reported the highest level of weekly
withdrawals with a drawdown of 81 Bcf. Total stocks on hand in mid February
2002 exceed last year's levels by 961 Bcf and are more than 37 percent above
the previous 5-year average. This larger-than-average stock level is due to
higher stocks at the beginning of the current heating season on November 1,
2001, of 3,109 Bcf compared with the previous year's 2,699 Bcf and lower
cumulative net withdrawals during the current heating season. The above normal
temperatures that have prevailed in most of the lower 48 states have been a key
factor in the reduced withdrawals this winter. During November and December 2000,
HDDs were roughly 16 and 20 percent above normal, which resulted in total net
withdrawals during the first two months of that heating season of 1,008 Bcf
compared with 436 Bcf during the same months in 2001. (See
Storage Figure)
All Volumes
in Bcf |
Current
Stocks (Fri, 2/15) |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri, 2/8)* |
|
East Region |
1,143 |
865 |
32% |
-81 |
1,224 |
|
West Region |
248 |
204 |
21% |
-8 |
256 |
|
Producing
Region |
629 |
401 |
57% |
-23 |
652 |
|
Total Lower
48 |
2,020 |
1,471 |
37% |
-112 |
2,132 |
|
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
number of active natural gas drilling rigs continues to decline in the United
States. According to the latest Baker-Hughes report, the number of gas drilling
rigs moved down to 647 during the week ended Friday, February 22, 2002. This is
the lowest level since June 9, 2000, when the rig count was reported as 643. The latest weekly estimate is 39
percent below the mid July 2001 high of 1,068. Natural gas drilling rig
activity in Western Canada has also declined. The Canadian Association of
Drilling Contractors reports that as of February 15, the total number of
drilling rigs exploring for gas decreased to 492 compared to 602 in operation
at the same time last year.
Summary:
Based
on the latest NWS 6-to-10 day forecast, spot market prices moved up most days
last week on what appeared to be an anticipated increase in demand this week.
The futures market price also increased for the near-month March contract,
which is scheduled to end trading Tuesday, February 26. Barring any unforeseen
supply disruption and considering current stock levels, temperatures may need
to be below normal for several weeks for current price levels to be sustained.