for week ending May 22, 2002 | Release date: May 23, 2002 | Previous weeks
Natural gas spot and futures
prices trended down for the week (Wednesday to Wednesday, May 15-22). The cold front that moved into major gas-consuming
areas of the Midwest and Northeast for the weekend and lingered into the first
part of this week had minimal impact on prices. At the Henry Hub, the average spot price fell 24 cents for the
week to $3.38 per MMBtu. On the NYMEX,
the settlement price of the near-month contract (June delivery) declined for 5
straight trading sessions before recording a small increase of $0.064 per MMBtu
in May 22 trading, to settle at $3.459. The spot price for West Texas Intermediate (WTI) crude oil, which had
held at or above $28 per barrel since last Thursday, fell nearly $1 on Tuesday,
May 21, following the American Petroleum Institute's announcement of an
unexpected build in crude oil stocks of 5.5 million barrels for the week ended
Friday, May 17. For the week (May
15-22), the WTI price was down $0.99, at $27.01 per barrel, or $4.66 per MMBtu.
Prices:
Spot prices continued to trend
down for a third straight week as temperatures grew milder after the weekend
and crude oil prices lost the upward momentum that carried them over the $29
mark last week. Price decreases were
mostly on the order of 15 to 20 cents per MMBtu for the week, except for the
Rockies, where price declines averaged $0.48 per MMBtu, resulting in a regional
average price on Wednesday, May 22 of $1.95. The most dramatic price decline occurred on the Florida Gas Transmission
(FGT) system. Six days ago, the FGT
citygate price was well over $7 per MMBtu; yesterday, it stood at $3.80. Falling temperatures and easing pipeline
constraints contributed significantly to the large price drop. On Thursday, FGT was able to cancel the
Overage Alert day notice that had been in effect for two and one-half weeks,
prompting a one-day price drop of $1.78 per MMBtu. Price declines in the Midwest were around 20 cents per MMBtu; the
Chicago citygate price fell $0.21 to $3.42 per MMBtu. Northeast cash-price declines were generally a few pennies less,
with New York citygate prices falling 17 cents to $3.75 per MMBtu. Declines at northern California points were
around 40 cents per MMBtu, while the Southern California Border average price
declined by 14 cents to $3.12 per MMBtu.
On the NYMEX, futures prices fell for 5 days in a
row. The contract for June delivery had
declined a cumulative 46 cents per MMBtu over that 5-day period, before edging
up slightly yesterday to settle at $3.459 per MMBtu. Currently, the highest-priced gas for delivery in the coming
heating season is for January delivery, at $4.229 per MMBtu.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
16-May |
17-May |
20-May |
21-May |
22-May |
|
Henry Hub |
3.44 |
3.42 |
3.44 |
3.33 |
3.38 |
New York |
3.73 |
3.76 |
3.80 |
3.69 |
3.75 |
Chicago |
3.49 |
3.50 |
3.53 |
3.39 |
3.42 |
Cal. Comp. Avg,* |
3.00 |
2.88 |
3.07 |
2.93 |
2.91 |
Futures ($/MMBtu) |
|
|
|
|
|
June delivery |
3.609 |
3.598 |
3.490 |
3.395 |
3.459 |
July delivery |
3.689 |
3.681 |
3.570 |
3.473 |
3.537 |
*Avg. of NGI's reported
avg. prices for: Malin, PG&E
citygate, |
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and Southern California
Border Avg. |
|||||
Source: NGI's Daily Gas
Price Index (http://intelligencepress.com). |
Storage:
Net injections into storage were 68 Bcf during the
week ended May 17, according to EIA's Weekly
Natural Gas Storage Report, bringing total inventories to 1,725 Bcf (See
Storage Figure). This
marks the third consecutive week that total net injections have been less than
the prior 5-year (1997-2001) average of stock change for the week (see
Historical Weekly Storage Estimates database). The total of 68 Bcf is about 11 percent
below the 5-year average of 77 Bcf. The
week covered by the storage report experienced unusually cool weather in the
Midwest, the Northeast, and much of the Midcontinent, and hotter than normal
temperatures in parts of the Southeast and Southwest. This combination spurred some swing demand for gas that might
otherwise have been destined for storage. Temperatures generally were up to 9 degrees cooler than normal in much
of the eastern two-thirds of the country, and up to 5 degrees warmer than
normal in most of Florida and the Southwest (See
Temperature Map) (See Deviation Map). Although the surplus of stocks with respect
to the 5-year average has decreased, inventories remain over 300 Bcf greater
than the 5-year average. Over the past 5 years, the earliest date that a
comparable level was reached, according to EIA estimates, was May 21, 1999.
All Volumes
in Bcf |
Current
Stocks 5/17/2002 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Net Change from
Last Week |
One-Week
Prior Stocks 5/10/2002 |
|
East Region |
813 |
737 |
10% |
34 |
779 |
|
West Region |
259 |
205 |
27% |
6 |
253 |
|
Producing
Region |
653 |
462 |
41% |
28 |
625 |
|
Total Lower
48 |
1,725 |
1,403 |
23% |
68 |
1,657 |
|
Source: Energy Information Administration: Form EIA-912, "Weekly Underground
Natural Gas Storage Report," and the Historical Weekly Storage Estimates
Database. |
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Other Market Trends:
Merchants'
Exchange to Launch Energy Futures Trading: The Chicago-based Merchants' Exchange
announced that it will launch its new on-line cash-settled energy futures
exchange this week. Trading in Henry Hub natural gas futures and West Texas
Intermediate (WTI) crude oil futures will commence for the first time at 10:00
am on Friday, May 24. The specifications of the Henry Hub natural gas futures
contract will be similar to those of the natural gas contract that is traded on
the New York Mercantile Exchange (NYMEX). Trading will be conducted in each
month within the next 36 months following the current calendar month, and the
exchange's board of managers will set trading hours. The contract will be
traded in lots of 10,000 MMBtu with no limits set on daily prices. The exchange is subject to oversight by the
Commodity Futures Trading Commission (CFTC). CFTC also approved four other futures contracts for the Merchants'
Exchange that will likely begin trading in the near future; these include Brent
crude, New York Harbor unleaded gasoline, New York Harbor heating oil, and
European gas oil.
Natural
Gas Rig Counts: The number of rigs exploring for natural gas increased by 27 to
696 for the week ended Friday, May 17, according to Baker-Hughes
Incorporated. Natural gas rigs are
nearly 30 percent below last year at this time when they numbered 992. However, since the week ended April 5, 2002,
when natural gas rigs numbered 591, the number of rigs has increased for six
straight weeks, climbing almost 3 percent per week on average. The rig count now is almost 18 percent above
the level recorded on April 5 and is at its highest level since early February
2002. According to the EIA Short-Term Energy Outlook (released
May 6), aggregate lease revenues from domestic oil and gas production are expected to move
up this year and settle at about $300 million per month in 2003, which would be
an increase of approximately 50 percent over the rates seen at the end of
2001. Inasmuch as these revenues are a
strong determinant of industry cash flow, which in turn is a powerful driver of
drilling activity levels, an upward trend in gas drilling levels is anticipated
for this year and into 2003.
Summary:
Spot and futures prices
continued a downward trend as temperatures began to turn milder and crude oil
prices declined. The EIA estimate of
net storage injections, although less than the 5-year average, was well within
the market's prevailing expectations.
Natural Gas Summary from the
Short-Term Energy Outlook