for week ending March 17, 2002 | Release date: March 18, 2002 | Previous weeks
Spot prices at most market
locations across the country finished the week on Friday, March 15 with sharp
gains that contributed to significant increases ranging between 11 and 36 cents
per MMBtu over the previous Friday. Prices
at the Henry Hub climbed 18 cents per MMBtu from the previous Friday to trade
at $2.99. On the NYMEX, the price of
the futures contract for April delivery at the Henry Hub settled at $3.076 per
MMBtu, up roughly 28 cents over the previous Friday. A trend towards cooler temperatures across some parts of the
country, larger-than-expected net withdrawals from storage for the week ended
Friday, March 8, and a recovering economy that increased demand likely
contributed to the rally in prices. (See Temperature Map) (See Deviation Map). The spot price for West
Texas Intermediate (WTI) crude oil increased by over 2.5 percent, climbing to
$24.47 per barrel or $4.22 per MMBtu.
Prices:
In a week of heightened
variability, spot prices at many locations throughout the country climbed
through mid-week, before falling by 10 to 23 cents on Thursday March 14 and
recovering the following day. Cooler
temperatures across the northern portions of the country and in the West,
combined with expectations of cooler temperatures in the Southeast, likely
contributed to the price increases. The
spot price at the Henry Hub finished the week at $2.99 per MMBtu, roughly 18
cents or over 6 percent higher than the previous Friday. Spot prices in the Rocky Mountains exhibited
the largest weekly gains as well as a high degree of daily variability as an
outage on the Kern River system curtailed supplies in the region. By Friday, prices in the Rockies were 25 to 36
cents higher than on the previous Friday. The curtailed supplies in the Rockies likely affected the California
market also. As gas-fired electric
generation peaking units responded to the high electricity demand in the
region, natural gas prices in California spiked, ending the week between 26 and
31 cents greater than the previous Friday.
At the NYMEX, the settlement price of the futures contract for April delivery at the Henry Hub exhibited considerable variation. Prices climbed in Monday trading and declined in each of the following two days before climbing on Thursday and Friday to end the week at $3.076 per MMBtu, up roughly 28 cents or nearly 10 percent greater than the previous Friday. This pattern also prevailed for the contracts for delivery in the upcoming months through the November 2002 contract. Factors contributing to the overall increases included the latest National Weather Service (NWS) forecasts, a robust storage withdrawal in the preceding week, and low gas rig counts. The 6- to 10-day NWS forecast calls for cold temperatures throughout large sections of the western two-thirds of the country. In addition, the latest 30-to-90-day outlook released on Thursday, March 14, by the NWS projects warmer than normal temperatures in the Southeast and many of the western states through the early summer months.
Spot Prices ($ per MMBtu) |
Mon. |
Tues. |
Wed. |
Thurs. |
Fri. |
11-Mar |
12-Mar |
13-Mar |
14-Mar |
15-Mar |
|
Henry Hub |
2.90 |
2.93 |
2.96 |
2.79 |
2.99 |
New York citygates |
3.21 |
3.21 |
3.22 |
3.01 |
3.28 |
Chicago citygate |
2.94 |
2.97 |
3.00 |
2.85 |
3.08 |
PG&E citygate |
3.05 |
3.06 |
3.07 |
2.93 |
3.22 |
So. Cal. Border Avg. |
2.95 |
2.95 |
2.96 |
2.83 |
3.10 |
Futures ($/MMBtu) |
|
|
|
|
|
April delivery |
3.021 |
3.018 |
2.870 |
2.924 |
3.076 |
May delivery |
3.068 |
3.063 |
2.920 |
2.964 |
3.114 |
Source: NGI's
Daily Gas Price Index (http://intelligencepress.com) |
Storage:
Net withdrawals from storage for the week ended
Friday, March 8, were 140 Bcf according to the American Gas Association (AGA).
This is the second consecutive week that estimated withdrawals were well over
100 Bcf and more than double the previous 5-year average. The cold weather in
much of the country in early March may have been the key contributor to the
increased utilization of storage resources. The NWS reported that
gas-consumer-weighted heating degree-days (HDDs) were 2 percent above normal
for the week ending March 9. HDDs in
the Pacific, Mountain, and Central Census divisions ranged between 9 percent
and 28 percent above normal, which more than offset the 18- to 20-percent
warmer temperatures in the New England and Middle Atlantic divisions. Despite the elevated stock drawdown,
remaining working gas is almost 39 percent or nearly 500 Bcf above the 5-year
average of 1,251 Bcf. (See Storage Figure)
All Volumes
in Bcf |
Current
Stocks (Fri,3/8) |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri, 3/1) |
East Region |
919 |
699 |
32% |
-82 |
1,001 |
West Region |
250 |
182 |
38% |
-8 |
258 |
Producing
Region |
567 |
371 |
53% |
-50 |
617 |
Total Lower
48 |
1,736 |
1,251 |
39% |
-140 |
1,876 |
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:
Gas drilling activity. Rigs drilling for natural
gas numbered 610 according to the Baker-Hughes rig count report released on
Friday, March 15. This is a decline of 14 rigs or over 2 percent from the prior
week. With this decline, the number of rigs moved to its lowest level since
April 28, 2000, when rigs numbered 598. Since reaching its record-setting peak of 1,068 rigs during the week
ended July 13, 2001, rigs drilling for gas have declined by roughly 43 percent,
which is an average weekly decline rate of about 1.6 percent. The rig count is
over 32 percent below the level recorded during the same week last year. Despite the recent declines, rigs drilling
natural gas prospects remain close to historical levels. The current gas rig count is comparable to
the average of 609 rigs for March in the preceding 5 years, which includes the
exceptional drilling runup of 2000-2001. However, continued declines in drilling for natural gas prospects could
jeopardize gas supplies in the longer term.
Summary:
Spot prices finished the week on Friday, March 15,
showing significant gains over the previous Friday. On the NYMEX, the settlement price of the futures contract for
April delivery at the Henry Hub climbed about 10 percent over the previous
Friday. Net withdrawals of natural gas
from storage were 140 Bcf for the week ended March 8 as a result of cold
temperatures in the Lower 48 States. The number of rigs fell by 14 last week, but the count remains
comparable with the preceding 5-year average.