for week ending July 4, 2002 | Release date: July 5, 2002, 2002 | Previous weeks
Natural gas spot prices declined by 30 cents or more at most market
locations in the Lower 48 last week as temperatures across the country began to
moderate from recent extreme highs. The average spot price at the Henry Hub
during the week (Wednesday, June 26 to Wednesday July 3) fell by more than 9
percent to $3.10 per MMBtu. The NYMEX futures contract for August delivery fell
6 percent on the week for a closing price of $3.142 per MMBtu. Natural gas in
storage increased to 2,260 Bcf for the week, which is 19.5 percent above the
5-year average inventory at this time of the year, according to EIA's Weekly Natural Gas Storage Report. The spot price for West Texas Intermediate
(WTI) crude oil increased $.15 per barrel since last Wednesday, trading at
$26.82, or $4.62 per MMBtu.
Prices:
Spot prices fell at major trading locations along
the Gulf Coast and at key citygate market centers by 10 percent or more in the
last week as cooling demand slackened along with moderating temperatures in
many areas of the country. The Henry Hub spot price, which opened the month of
July trading at $3.27 per MMBtu, declined 17 cents in two trading sessions for
an average of $3.10 on Wednesday. Chicago and New York citygate prices dropped
close to 10 percent to $3.07 per MMBtu and $3.64, respectively. Before prices
collapsed 52 cents on Wednesday, a heat wave in the Northeast had boosted
prices at the Transco Zone 6 New York delivery point to $4.16 per MMBtu, which
was the highest average price at the pipeline delivery point since last
January. In contrast, prices in the Northwest tumbled to lows for the year at
several trading locations as supplies flooded the region and buyers were scarce
owing to the lack of extreme weather. With pipelines heading to Chicago and eastern regions full, Canadian
supplies were diverted to Northwest markets during the week. On Wednesday, gas
traded at an average price of 78 cents per MMBtu at Sumas, Washington, and at
76 cents at Opal, Wyoming.
At the NYMEX, the settlement price of the futures
contract for August delivery fell 6 percent on the week to close on Wednesday
at $3.142 per MMBtu. In its first week of trading as the near-month contract,
the August contract lost 21 cents to return near its recent low of $3.124 per
MMBtu, reached on June 12. During Wednesday's trading, the futures contract for
September delivery also dropped slightly (less than 1 cent) to $3.174 per
MMBtu. The 12-month strip, or the average price for futures contracts over the
next year, finished Wednesday at $3.623 per MMBtu. The spread between the
August contract and the contract with delivery in January 2003 stands at 78.2 cents,
well above the 45-50 cents difference during trading in the spring of 2002.
During a special electronic trading session on Wednesday afternoon, the price
of the August contract fell 3.2 cents to $3.110 per MMBtu after EIA released it
most recent storage estimates for natural gas. The NYMEX held the session from
3:15-5:15 p.m. to allow traders to react to the storage report. Trades during
the session will be considered as having been transacted July 8.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
27-Jun |
28-Jun |
1-Jul |
2-Jul |
3-Jul |
|
Henry Hub |
3.23 |
3.20 |
3.27 |
3.17 |
3.10 |
New York |
3.61 |
3.69 |
3.95 |
4.16 |
3.64 |
Chicago |
3.21 |
3.20 |
3.27 |
3.18 |
3.07 |
Cal. Comp. Avg,* |
2.56 |
2.58 |
2.66 |
2.37 |
2.13 |
Futures ($/MMBtu) |
|
|
|
|
|
Aug delivery |
3.236 |
3.245 |
3.192 |
3.145 |
3.142 |
Sept delivery |
3.266 |
3.273 |
3.220 |
3.177 |
3.174 |
*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:
Natural gas in storage totaled 2,260 Bcf in the
Lower 48 States for the week ended Friday, June 28, 2002, according to EIA's Weekly
Natural Gas Storage Report. With
the implied injection of 69 Bcf for the week, stocks are now 393 Bcf higher
than last year at this time and 368 Bcf higher than the 5-year average of 1,892
Bcf (See
Storage Figure). In the Consuming East region, stocks grew to
1,171 Bcf, which is 10.8 percent higher than the 5-year average. This week's
estimate for the Consuming Region East included an upward revision of 7 Bcf to
the inventory level from the previous week. The 69 Bcf injection for Lower 48
states is about 10 percent lower than the 5-year average injection of 77 Bcf
for the comparable week. Across the
country for the week ending June 29, temperatures were about 20 percent warmer
than normal and 25 percent warmer than last year based on cooling degree days
(CDDs). In key market areas in the Mid-Atlantic and Northeast, CDDs were nearly
double normal levels. (See Temperature Map)
(See Deviation Map)
All Volumes
in Bcf |
Current
Stocks 6/28/2002 |
Estimated Prior
5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks 6/21/2002 |
|
East Region |
1,171 |
1,057 |
11% |
49 |
1,122 R |
|
West Region |
320 |
265 |
21% |
6 |
314 |
|
Producing
Region |
769 |
571 |
35% |
14 |
755 |
|
Total Lower
48 |
2,260 |
1,892 |
20% |
69 |
2,191 R |
|
Source: Energy Information Administration: Form EIA-912, "Weekly Underground
Natural Gas Storage Report," and the Historical Weekly Storage Estimates
Database. R=Revised |
||||||
Other Market Trends:
Elements of Local
Distribution Company Supply Surveyed: The
American Gas Association (AGA) released the report LDC Supply Portfolio
Management During the 2001-2002 Winter Heating Season, which outlines
survey responses received from 32 natural gas utilities in 25 states. To balance the need to minimize gas
acquisition risk and the obligation to provide low-cost reliable service, LDCs
manage a portfolio of supply, storage, and transportation service contracts. Of
the 29 LDCs reporting, 24 indicated that long-term contractual agreements (1
year or longer) were a part of their peak-day purchases during the 2001-2002
heating season. Twenty-two companies
reported using mid-term contracts, while 16 companies reported using daily
contracts. In addition, over half of
the LDC respondents reported that they use financial instruments, fixed price
contracts and gas in storage as price hedges. Over three-fourths of the
respondents indicated that for the 2002-2003 winter heating season they plan to
hedge the same or more of their purchased gas volumes.
Summary:
Spot prices declined 30
cents or more at most market locations during the week since June 26. Prices in
the Northwest dropped to well below $1 per MMBtu at many trading locations due
to an abundance of supplies from Canada. The futures contract for August delivery dropped in four consecutive
trading sessions this week to close on Wednesday at $3.142 per MMBtu, a drop of
21 cents or 6.3 percent on the week. As of June 28, storage stocks were 2,260
Bcf, a level about 19.5 percent above the average for the past 5 years.