for week ending May 15, 2002 | Release date: May 16, 2002 | Previous weeks
Natural gas spot prices at
many trading locations this week surged close to their highest levels for the
month, but then eased yesterday (May 15) as cooler weather relieved a heat wave
in the South and a recent run-up in the price of crude oil abated. On Tuesday, the NYMEX closing price of
$3.855 per MMBtu for the futures contract with June delivery was the highest
price for a near-month contract since June 2001. But by the end of trading the
next day, prices had subsided along with a drop in crude oil prices. After reaching a high of $29.17 per barrel
on Tuesday, the spot price for West Texas Intermediate (WTI) crude oil dropped
Wednesday to an average of $28.17 per barrel, or $4.86 per MMBtu. This was an increase of 3 percent since last
Wednesday.
Prices:
Spot prices in most
locations softened in the past week (May 8 to 15) by between 10 and 20
cents. The Henry Hub cash price eased
12 cents, or about 3 percent, to an average of $3.62 per MMBtu yesterday. New York and Chicago citygate prices
followed suit with similar declines of about 3 percent from the previous
week. Concerns over tensions in the
Middle East contributed to increases in prices early in the week, but these
fears of supply disruptions faded and crude oil prices fell during yesterday's
trading session. Expectations of weak
summer demand for natural gas likely contributed to yesterday's declines. Since the beginning of May, the cash price
at the Henry Hub has bumped up to between $3.74 per MMBtu and $3.79 three
times, then retreated. Major price
aberrations continue in Florida and the Rockies. Owing to pipeline outages and maintenance on the Florida Gas
Transmission system for most of the month, Florida prices remain the highest in
the country. After averaging between
$7.46 per MMBtu and $7.58 for the past week, prices retreated on May 15 to
about $6.90 per MMBtu as temperatures in the South moderated. In the Rockies, prices recovered from lows
in the $1.80s late last week to trade at over $2.12 per MMBtu at most of the
region's trading locations. However,
considerable daily variability in prices continues to characterize the region.
At the NYMEX, the price of
the futures contract for June delivery dropped 5.6 percent yesterday to close
at $3.64 per MMBtu, erasing the gains made earlier in the week. This $0.215 drop capped a week in which the
price of the near-month (June) contract increased for three consecutive
sessions, reaching an 11-month high on Tuesday, May 14 at a closing price of
$3.855 per MMBtu. The rise in natural
gas futures prices followed a surge in crude oil prices that resulted from
tensions in the Middle East and expectations of lower crude inventories. As crude oil prices fell by $1 per barrel yesterday,
natural gas futures prices also declined, approaching their lowest levels for
the month. As of yesterday's close, the
futures contracts for July delivery continued to trade at about a 7.5-cent
premium to the near-month contract. The
spread between the near-month contract and the futures contract for January
2003 delivery is $0.732 per MMBtu.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
9-May |
10-May |
13-May |
14-May |
15-May |
|
Henry Hub |
3.72 |
3.71 |
3.61 |
3.75 |
3.62 |
New York |
4.05 |
4.00 |
3.91 |
4.06 |
3.92 |
Chicago |
3.74 |
3.73 |
3.64 |
3.79 |
3.63 |
Cal. Comp. Avg,* |
3.39 |
3.16 |
3.28 |
3.37 |
3.21 |
Futures ($/MMBtu) |
|
|
|
|
|
June delivery |
3.719 |
3.749 |
3.783 |
3.855 |
3.640 |
July delivery |
3.768 |
3.800 |
3.831 |
3.912 |
3.715 |
*Avg. of NGI's reported
avg. prices for: Malin, PG&E
citygate, |
|||||
and Southern California
Border Avg. |
|||||
Source: NGI's Daily Gas
Price Index (http://intelligencepress.com). |
Storage:
Net injections of natural gas into storage were 55
Bcf for the week ended, May 10, 2002, according to EIA's Weekly Gas Storage
Report. Injections were below the
5-year average of 77 Bcf for the United States as a whole, as well as the
5-year averages in all three regions in the storage report. With a net injection for the week of 35 Bcf,
storage activity in the East Region fell 30 percent short of the 5-year average
injections of 50 Bcf and 45 percent below last year's injection of 64 Bcf. The East Region injection is the lowest
injection for the comparable week in 6 years. With cooling demands (measured by cooling degree days) between 73
percent and 90 percent higher than normal in southern parts of the country,
injections in the Producing Region totaled 16 Bcf (See Temperature Map) (See Deviation Map). Storage activity in the West resulted in net
injections of 4 Bcf, or about 50 percent of the 5-year average for the
region.
Although there was a relatively low injection in
comparison to last year and the 5-year average, inventories remain well above
historical levels. At 1,657 Bcf, total
storage levels remain 500 Bcf over last year and 330 Bcf over the 5-year
average. Inventory levels in the
Producing Region have outpaced the 5-year average by 41.2 percent, the highest
percentage difference of the regions. Stocks in the East are 13.2 percent ahead of the 5-year average. (See
Storage Figure)
This week's inventory levels include an adjustment
of 8 Bcf to last week's stock estimates in the East Region, which also changes
the estimated Total Lower 48 stocks. Comparable changes were required for all weeks from March 15 through May
3. Thus, the net change in stocks
between April 26 and May 3 remains at 39 Bcf. A complete set of updated weekly estimates for the period from Dec. 31,
1993 to April 26, 2002 is available at http://tonto.eia.doe.gov/oog/info/ngs/history.html.
All Volumes
in Bcf |
Current
Stocks 5/10/2002 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks 5/3/2002 |
|
East Region |
779 |
688 |
13% |
35 |
744 R |
|
West Region |
253 |
196 |
29% |
4 |
249 |
|
Producing
Region |
625 |
442 |
41% |
16 |
609 |
|
Total Lower
48 |
1,657 |
1,327 |
25% |
55 |
1602 R |
|
Source: Energy Information Administration: Form EIA-912, "Weekly Underground
Natural Gas Storage Report," and the Historical Weekly Storage Estimates
Database. R: Revised |
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Other Market Trends:
NYMEX to Launch OTC Energy Clearing Services: The New York Mercantile Exchange (NYMEX) has announced that it will
begin over-the-counter (OTC) energy clearing services for 25 of the most
commonly traded OTC energy contracts on May 31, 2002. The new services will cover a variety of common location- and
index-based OTC products. In addition to natural gas swaps contracts based at
the Henry Hub in Louisiana, the OTC transactions will include natural gas basis
swaps contracts for the AECO-C Hub in Alberta, Chicago Citygate, Houston Ship
Channel, San Juan Basin, Southern California border, Transco Zone 6, Northwest
Pipeline Rockies, and Panhandle Eastern Pipe Line Co. The transactions will not
be displayed by NYMEX, but will remain confidential. The NYMEX will accept the
OTC trades between the hours of 7:00 AM to 1:30 PM EST each business day. Once two parties complete a transaction
covering the common OTC products, the contracts will be posted with NYMEX
marked to market and cleared by the NYMEX. According to NYMEX, the new offering
will give energy markets new products to trade, increased trading security, and
new trading flexibility.
Pipeline Addition in Florida
to Become Operational: The Gulfstream Natural Gas System, which is a pipeline project to
deliver natural gas to Manatee County in central Florida from Pascagoula,
Mississippi and Mobile, Alabama, appears to be on target to begin operations on
June 1, 2002. Phase 1 of the project,
which will deliver gas to the Tampa-St. Petersburg area, will be the first part
of the pipeline to become operational. Crossing the Gulf of Mexico with 431 miles of 36-inch diameter steel
pipe, the pipeline will have the capacity to transport 1.1 billion cubic feet
per day of natural gas to customers in Florida. Industry sources indicate that the pipeline will begin
line-packing during the last 2 weeks of May in anticipation of the June 1 start
date. This should help to lower prices
in the Sunshine State, which has been beleaguered by force majeures and
other supply constraints as well as hot temperatures this spring. Phase 2 of the project will extend further
south to Palm Beach County.
Summary:
After increasing through
three consecutive trading sessions, spot prices yesterday (May 15) dropped
between 10 and 20 cents at most trading locations owing to a lack of
weather-driven demand and an easing in crude oil prices. Storage injections for the week ending May
10 totaled 55 Bcf. Inventories for the
United States as a whole are now 330 Bcf over the 5-year average.