U.S. Energy Information Administration logo
Skip to sub-navigation

Natural Gas

‹ See the most recent Natural Gas Weekly Update

Natural Gas Weekly Update Archive

for week ending March 24, 2002  |  Release date:  March 25, 2002   |  Previous weeks


After moving down at mid-week, spot prices at most major market locations rebounded and climbed to levels not seen in over 6 months. At the Henry Hub prices gained $0.35 on Friday to end the week at $3.54 per MMBtu, the highest reported daily mid-point price since June 25, 2001. On the NYMEX the futures contract for April delivery ended trading on Friday at $3.326 per MMBtu. This is $0.90 per MMBtu higher or 37 percent above its settlement price when it began to trade as the near-month contract on February 27. Much of the country had cooler-than-normal temperatures last week, especially in the Northern Plains and the Northeast. (See Temperature Map) (See Deviation Map). The spot price of West Texas Intermediate (WTI) crude oil continued to climb, exceeding $25 most days last week, and ended trading on Friday at $25.56 or $4.40 per MMBtu.





In a week that displayed considerable variability, prices ended trading at a higher level than the previous Friday for the fifth consecutive week. Between February 15 and March 22, the Henry Hub spot price has increased from $2.18 per MMBtu to $3.54, a gain of more than 60 percent. Factors contributing to this recent resurgence in spot prices include low temperatures in the northern tier and in much of the eastern two thirds of the country, expectations of higher prices through the rest of the year, and the more than 25 percent rise in the price of crude oil in the past 4 weeks. Major citygate prices all moved up sharply in Friday's trading. The Chicago citygate traded at a price of $3.69 per MMBtu for a gain of $0.39 for the day, while prices at most Northeast citygate markets climbed between $0.20 and $0.40 per MMBtu. Prices in Transco Zone 6 for New York delivery increased 7 cents on Friday after gaining almost $0.65 during the prior 4 days of trading and ended the week at $3.99. Prices at California markets reached their highest levels since mid August 2001, trading between $3.53 and $3.60 as a reported shut down of a unit at the state's PaloVerde nuclear plant contributed to increased demand at natural gas generating facilities.


At the NYMEX, the near-month contract for April delivery declined more than 10 cents on Friday, after moving up almost $0.32 per MMBtu during Thursday's trading, to end the week at $3.326. For the week the April contract gained $0.25 from the previous Friday's settlement and this followed the previous week's almost $0.45 gain. Despite the recent increases in the April contract, which closes tomorrow (3/26/02), it appears likely that it will conclude trading more than 30 percent below last year's April contract's expiry price of $5.384.


Spot Prices ($ per MMBtu)











Henry Hub






New York citygates






Chicago citygate






PG&E citygate






So. Cal. Border Avg.






Futures ($/MMBtu)






April delivery






May delivery






Source: NGI's Daily Gas Price Index (http://intelligencepress.com)



Net withdrawals from storage were 50 Bcf for the week ended Friday, March 15 according to the American Gas Association. Following two consecutive weeks in which net withdrawals were well over 100 Bcf and twice as high as the 5-year average for these weeks, withdrawals were nearly 31 percent below the week's 5-year average of 72 Bcf. Lighter-than-normal heating load likely accounted for the relatively small drawdown of stocks as temperatures were warmer than normal in most parts of the country. Gas-weighted heating degree days (HDDs) were 9 percent below normal in the Lower 48 States, with HDDs up to 27 percent below normal in some regions of the country for the week ended Saturday, March 16. In New England, HDDs were over 14 percent below normal while net withdrawals in the East region were over 22 percent below normal. In contrast, the West region had net withdrawals of 9 Bcf, more than double its 5-year average, as HDDs ranged from 2 to 15 percent above normal in the Pacific and Rocky Mountain states. For the first time since early December 2001, the Producing region increased its stocks of working gas in storage, reporting net injections of 2 Bcf. Total working gas stocks remain nearly 900 Bcf more than year-earlier levels. (See Storage Figure)


All Volumes in Bcf

Current Stocks (Fri,3/15)

Estimated Prior 5-Year (1997-2001) Average

Percent Difference from 5 Year Average

Net Change from Last Week

One-Week Prior Stocks (Fri, 3/8)

East Region






West Region






Producing Region






Total Lower 48






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:

Offshore Leasing. The U. S. Department of the Interior's Minerals Management Service (MMS) held a sale of offshore oil and natural gas leases in the Central Gulf of Mexico on March 20, which attracted $363 million in high bids from 77 companies. The total of all bids was $442 million. Lease Sale 182 offered 4,446 tracts offshore Alabama, Louisiana, and Mississippi; the MMS received 697 bids on 506 tracts. Tracts in less than 200 meters of water attracted much of the bidding, with 288 tracts receiving 405 bids, which amounts to 57 percent of the sale. Interest also was strong in waters beyond the shallow depths. MMS Director Johnnie Burton said independent companies and majors were "obviously encouraged by MMS's newest incentive of royalty relief for deep gas." Under the incentive, the first 20 Bcf of gas production from 15,000 feet or greater is royalty free. Approximately 31 percent of the tracts receiving bids were in ultra-deep water (more than 800 meters or approximately 2,625 feet). The deepest tract bid on was Atwater Valley, Block 347 in 2,665 meters of water (approximately 8,610 feet). The high bid on each block will go through an evaluation process to ensure the public receives fair market value before a lease is awarded.


FERC Issues Capacity Release Order. The Federal Energy Regulatory Commission issued Order 587-N on March 11, 2002, which gives shippers greater ability to recall released capacity from replacement shippers by allowing recalls for next-day and same-day flows. The intent of the rule is to provide more flexibility to holders of firm capacity and to free up capacity that most likely would not be released unless shippers were able to reclaim it to meet peak demand. The recall of released capacity will not reduce already scheduled volumes for replacement shippers unless they have an opportunity to reschedule. This protection is already in place for interruptible shippers. The rule will be implemented in two phases. Pipeline companies must file tariff sheets by May 1, 2002 (effective July 2002) to allow shippers to recall scheduled gas at the nomination cycles for next-day flow and to recall gas for same-day flow that has not been scheduled for use on that day. The American Energy Standards Board has been given 6 months to develop standards for flowing-day or partial-day recalls, with industry comments due on October 1, 2002, and reply comments on October 15.



Prices at the Henry Hub spot market continued their general upward trend to end trading last week at the highest level ($3.54) since June 2001. The April NYMEX contract has gained almost $0.70 during the past 2 weeks. Despite the recent increase, prices on the NYMEX for April delivery will likely end trading this week far below last year's April contract closing price. Net withdrawals from storage slowed to 50 Bcf during the second week of March and total working gas is again more than 40 percent above the 5-year average.