for week ending July 10, 2002 | Release date: July 11, 2002 | Previous weeks
Since Wednesday, July 3,
natural gas spot prices have declined at most locations east of the Rocky
Mountains, while climbing at most markets in the West. For the week (Wednesday-Wednesday), prices
at the Henry Hub fell 6 cents or 2 percent to $3.04 per MMBtu. High temperatures contributed to increased
cooling demand for gas, which spurred the price hikes in the West, while
smaller demand owing to the Fourth of July holiday weekend likely contributed
to the declines in the East.(See
Temperature Map) (See Deviation Map) The price of the NYMEX
futures contract for August delivery at the Henry Hub fell 20 cents yesterday
(July 10) to settle at $2.864 per MMBtu, almost 28 cents less than last
Wednesday's price. Natural gas in
storage increased to 2,353 Bcf, which exceeds the 5-year average by more than
19 percent. The spot price for West
Texas Intermediate (WTI) crude oil moved down 9 cents per barrel or less than 1 percent since last Wednesday, trading
at $26.73 per barrel or $4.61 per MMBtu.
Prices:
Spot prices fell at most market locations east of
the Rockies, while prices in the West increased driven principally by soaring
temperatures in the region. Since
Wednesday, July 3, many locations in the West recorded gains ranging between
$0.21 and $1.47, although prices there remain below those prevailing in eastern
markets. Most of the gains occurred on Monday, July 8, following the Fourth of
July weekend with the larger price hikes occurring in California At Malin, Oregon, prices more than doubled
since last Wednesday climbing to $2.69 per MMBtu. In contrast, prices generally fell in the eastern two-thirds of
the country, although some markets in the Midcontinent eked out narrow gains of
up to 4 cents per MMBtu. Elsewhere in
the East, price declines ranged between about a penny and 17 cents per MMBtu at
most markets. The largest drop in price
since last Wednesday occurred in New York, where the price fell 33 cents or
over 9 percent to average $3.31 on
Wednesday, July 10.
At the NYMEX, the price of the futures contract for
August delivery at the Henry Hub fell by almost 28 cents during the week to
settle at $2.864 per MMBtu on Wednesday, June 10. This is the lowest price for a near-month futures contract since March 7, 2002. Contributing factors to the decline in
futures prices likely include lessened demand due to milder temperatures in the
East this week, and expectations that working gas in storage will remain
abundant. Prices of the futures
contracts for delivery during the remaining months in 2002 fell roughly 20 to
27 cents per MMBtu since last Wednesday, July 3. Yesterday (July 10), the settlement prices of these contracts
declined between 10 and 13 cents. Although the price of the August futures contract is nearly 18 cents
less than the Henry Hub spot price, prices of the contracts for the peak winter
months of December through February are 59 cents or more above the current
Henry Hub spot price. This relative
price pattern remains a strong incentive for additions of natural gas to
storage for the winter heating season.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
4-Jul |
5-Jul |
8-Jul |
9-Jul |
10-Jul |
|
Henry Hub |
3.10 |
3.10 |
3.06 |
2.98 |
3.04 |
New York |
3.64 |
3.64 |
3.73 |
3.35 |
3.31 |
Chicago |
3.07 |
3.07 |
3.00 |
2.90 |
2.98 |
Cal. Comp. Avg,* |
2.13 |
2.13 |
2.71 |
2.85 |
2.88 |
Futures ($/MMBtu) |
|
|
|
|
|
Aug delivery |
Holiday |
Closed |
2.939 |
2.991 |
2.864 |
Sept delivery |
Holiday |
Closed |
2.982 |
3.029 |
2.902 |
*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:
Working gas in storage was 2,353 Bcf for the week ended
Friday, July 5, 2002, according to the EIA Weekly Natural Gas Storage Report. This is 19 percent above the 5-year average
for the report week, and 19 percent above the level last year for the same
week. (See
Storage Figure) The implied net change was 67 Bcf, which is
almost 21 percent below the 5-year average weekly change of 85 Bcf. However, to this point in the refill season,
implied net injections of natural gas into storage have closely approximated historical
levels, despite beginning the injection season with an extraordinarily high
level of gas in storage. Working gas in
storage was roughly 400 Bcf greater than the 5-year average at the beginning of
the refill season and is 373 Bcf above average as of July 5. Since April 1, 2002, net injections have
averaged roughly 9.3 Bcf per day, only 5 percent less than the 5-year average
of 9.8 Bcf per day to this point in the refill season.
All Volumes
in Bcf |
Current
Stocks 7/5/2002 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks 6/28/2002 |
|
East Region |
1,243 |
1,115 |
12% |
52 |
1,191 R |
|
West Region |
329 |
273 |
21% |
9 |
320 |
|
Producing
Region |
781 |
589 |
33% |
6 |
775 R |
|
Total Lower
48 |
2,353 |
1,977 |
19% |
67 |
2,286 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:
New revision policy under
consideration by EIA: The Energy Information Administration (EIA) is soliciting public
comments on a proposed new revision policy for the Weekly Natural Gas
Storage Report (WNGSR) in a Federal
Register notice published July 11,
2002. The current policy calls for
reporting a revision when the cumulative effect of changes is at least 7
billion cubic feet at either a regional or national level. Revisions are released as part of the next
scheduled WNGSR on the EIA web site. Comments are solicited by EIA regarding a new
policy that would allow larger scale revisions to be reported in an unscheduled
release on the EIA web site. It is
proposed that volume revisions below a specified threshold will be released
according to the established official schedule and that larger volume changes
will trigger a release outside the official schedule. Special topics for public comment include the appropriateness of
the overall plan, volume thresholds that trigger a separate report, timing of
unscheduled releases, and methods to notify the public in the case of an
unscheduled report. Comments
submitted in response to this Federal Register notice will be considered
during development of EIA's new policy for revisions of the WNGSR. Comments must be filed by August 12, 2002.
Canadian Natural Gas
Division Releases Annual Review and Outlook: Canadian natural gas producers and exporters had a record year for
volumes and revenues in 2001, according to the Natural Gas Division of Natural
Resources Canada. In its annual Canadian Natural Gas: Market Review &
Outlook, the Division notes that although prices weakened during the year,
prices in 2001 averaged out at record highs. Total revenues as measured at the
processing plant tailgate, including exports and domestic sales for Canadian
producers, set a new record at Cdn$37.6 billion. Export revenues accounted for Cdn$22.8 billion, an increase of 21
percent over last year. Gross export volumes for the year increased 4 percent
for a total of 3,728 Bcf. However, with imports tripling to about 228 Bcf as a
result of the newly-constructed Vector Pipeline re-importing gas into Canada,
net exports fell slightly to 3,500 Bcf. In its long-term outlook to 2010, the Division said that it expects U.S.
and Canadian demand to reach 31.8 Tcf, or approximately 7.8 Tcf over demand in
2001. The mix of supply sources expected to satisfy this demand includes: U.S.
gas production (22.9 Tcf); Canadian gas production (8.1 Tcf); and LNG imports
to the United States (1.2 Tcf).