for week ending March 31, 2002 | Release date: April 1, 2002 | Previous weeks
The release day for the Natural Gas Weekly Market Update will shift from Monday to
Thursday effective for the week of April 8-12. This is the last issue to be published on Monday. There will be no issue released on Monday,
April 8. The next issue will be
released on Thursday, April 11.
Spot prices fell sharply
after Tuesday, March 26, during last week's holiday-shortened trading, as
unseasonably cold temperatures began to moderate around midweek in many high
gas consumption areas. (See Temperature Map) (See Deviation Map). With the exception of the
expiring near-month contract, futures contract prices also trended down, but
the decreases were relatively modest. By Thursday's end of trading (both spot and futures markets were closed
for Good Friday, March 29), the Henry Hub average spot price had declined by
$0.35 per MMBtu since the previous Friday (March 22) to $3.19. The NYMEX futures contract for April
delivery at the Henry Hub expired on Tuesday on an upswing, gaining almost 15
cents in 2 days to close out trading at $3.472 per MMBtu. The new near-month
contract (May delivery) ended trading on Thursday at $3.283 per MMBtu, down
just over 9 cents in 2 days as the near-month contract. The spot price for West Texas Intermediate
(WTI) crude oil continued its steady rise, with modest gains early in the week
punctuated by a 42-cent per barrel increase on Thursday. The WTI spot price at week's end was $26.21
per barrel ($4.52 per MMBtu), up $0.62 per barrel over the previous
Friday. This is the highest price for
WTI since the third week of September 2001.
Prices:
Spot gas prices declined significantly after peaking
on Tuesday. Spot gas prices managed
gains of around 8 to 14 cents per MMBtu in most market locations on Tuesday,
influenced partly by cold temperatures that had lingered from the weekend in
the Midwest and Northeast and partly by Monday's strong gains in the futures
market. But with a general warming
trend beginning on Wednesday, the 3-day holiday weekend in the offing, and
still warmer temperatures forecasted for the weekend, spot prices fell sharply
by Thursday. Given the holiday-shortened
week, coupled with the end of March falling on Sunday, the vast majority of
spot-price deals on Wednesday were done to cover gas deliveries through the end
of the month, leaving Thursday's trading to arrange for flow in the first day
of the new month. On Wednesday, spot
prices for volumes through the end of March fell at nearly all locations in the
Lower 48 States, in the range of 6 to 45 cents per MMBtu. On Thursday, cash prices for gas on the
first day of April fell an additional 2 to 35 cents per MMBtu, with most
locations experiencing drops in the 10- to 20-cent range. The lone exception to this pattern was
Florida citygate prices, where an overage alert on the Florida Gas Transmission
system, in effect from Tuesday through Thursday, and day-time temperatures in
the 80s, brought prices back up to $4.00 per MMBtu on Thursday. Elsewhere, cumulative declines for the week
(encompassing March and April pricing) were primarily in the range of 30 to 50
cents per MMBtu.
On the futures market, prices
surged on Monday as unusually cold weather carried over from the weekend. The near-month contract (April delivery)
climbed 13.1 cents per MMBtu, then added another 1.5 cents on its last day of
trading on Tuesday, to expire at $3.472. Since becoming the near-month contract on February 27, the April
contract gained $1.045 per MMBtu—an increase of 43 percent. As of the end of trading on Thursday,
settlement prices for futures contracts for delivery through the end of the
next heating season had declined by just under 6 cents to nearly 8 cents per
MMBtu, with the highest priced gas in that period being for January 2003
delivery, at $3.971.
Spot Prices ($ per MMBtu) |
Mon. |
Tues. |
Wed. |
Thurs. |
Fri. |
25-Mar |
26-Mar |
27-Mar |
28-Mar |
29-Mar |
|
Henry Hub |
3.45 |
3.59 |
3.38 |
3.19 |
3.19 |
New York citygates |
3.81 |
3.89 |
3.67 |
3.65 |
3.65 |
Chicago citygate |
3.55 |
3.65 |
3.39 |
3.22 |
3.22 |
PG&E citygate |
3.60 |
3.67 |
3.38 |
3.14 |
3.14 |
So. Cal. Border Avg. |
3.47 |
3.57 |
3.31 |
3.14 |
3.14 |
Futures ($/MMBtu) |
|
|
|
|
|
April delivery |
3.457 |
3.472 |
Expired |
Expired |
Expired |
May delivery |
3.462 |
3.374 |
3.290 |
3.283 |
Closed |
June delivery |
3.484 |
3.394 |
3.315 |
3.309 |
Closed |
Source: NGI's
Daily Gas Price Index (http://intelligencepress.com) |
Storage:
Total net withdrawals from storage were 69 Bcf for
the week ended Friday, March 22, according to American Gas Association (AGA)
estimates. This is the second highest
level of withdrawals for this week in the 9-year span of AGA data, and is 65
percent greater than the average drawdown for the week (42 Bcf) over the past 5
years (1997-2001). Net withdrawals in
the East region were about 22 percent greater than the previous 5-year average,
while those in the Producing region equaled that region's 5-year average. Not only were the net withdrawals of 13 Bcf
in the West region the largest for this week in the 9-year AGA data series, but
they also were an unusual departure from the pattern in this region over the
previous 6 years. During 1996-2001, the
West region consistently recorded net injections in this week, averaging 6 Bcf
over that period. The unusually high
storage withdrawals this year occurred in a week in which temperatures deviated
from normal by the greatest amount this heating season. Gas-weighted heating degree days (HDDs) for
the nation as a whole were 15 percent greater than normal. Further, according to National Weather
Service data, this was the only week thus far this winter in which gas-weighted
HDDs exceeded normal in all nine Census divisions of the Lower 48 States. In
addition, HDDs exceeded normal by the largest percentage of any week this
winter in the four Census divisions encompassing the northern half of the
nation from North Dakota eastward through the Middle Atlantic and New England. (See Storage Figure)
All Volumes
in Bcf |
Current
Stocks (Fri,3/22) |
Estimated
Prior 5-Year (1997-2001) Average |
Percent Difference
from 5 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks (Fri, 3/15) |
East Region |
826 |
614 |
35% |
-50 |
876 |
West Region |
228 |
177 |
29% |
-13 |
241 |
Producing
Region |
563 |
365 |
54% |
-6 |
569 |
Total Lower
48 |
1,617 |
1,156 |
40% |
-69 |
1,686 |
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:
The reopening of the Williams
Companies' liquefied natural gas (LNG) import facility at Cove Point, MD has
been delayed once again. Originally scheduled
to be in operation in the spring of 2001, the terminal's reopening and
operations underwent additional scrutiny over concerns about its proximity to a
nuclear power plant, which were heightened in light of the September 11
terrorist attacks. On October 12, 2001,
the Federal Energy Regulatory Commission granted a blanket certificate for the
reactivation of the terminal, including approval to implement a number of
upgrades, such as the construction of a fifth LNG storage tank that, when
placed into operation, would make the facility the largest in the United
States. Pending the approval of a state
air quality permit, the facility may reopen sometime in the fourth quarter of
this year or perhaps early in 2003. LNG
imports fell sharply in the fourth quarter of last year, causing significant
decreases in activity at a similar facility at Lake Charles, Louisiana, and
slowing the resumption of operations at the newly reopened Elba Island terminal
in Georgia.
Summary:
Spot gas prices fell markedly as the advent of more
spring-like temperatures coincided with the 3-day Easter weekend. Futures market prices declined more
gradually, perhaps buoyed somewhat by near-term forecasts for below normal
temperatures in the Midcontinent, Midwest, and much of the Northeast for this
week. Greater-than-normal storage
withdrawals in the next-to-last week of the traditional heating season had
scant effect on the level of incremental storage over the 5-year average. The differential is almost certain to be
somewhere between 400 to 500 Bcf by the end of March.