for week ending July 17, 2002 | Release date: July 18, 2002 | Previous weeks
Since Wednesday, July 10,
natural gas spot prices have declined slightly at most trading locations in the
Lower 48 States. For the week (Wednesday-Wednesday), prices at the Henry Hub fell
6 cents or 2 percent to $2.98 per MMBtu. Notable exceptions to the general
market trend included a recovery in prices at Rockies trading locations and an
upward surge in the spot price at the New York citygate. The price of the NYMEX
futures contract for August delivery at the Henry Hub fell $0.023 per MMBtu on
the week to settle at $2.841 on Wednesday (July 17). Natural gas in storage for
the week ending July 12 increased to 2,422 Bcf, which exceeds the 5-year
average by 17.8 percent. The spot price
for West Texas Intermediate (WTI) crude oil increased $1.15 per barrel since
last Wednesday, trading at $27.88 or $4.81 per MMBtu.
Prices:
Spot prices at trading
locations along the Gulf Coast and in the Southwest fell to 4-month lows last
week before staging a mild recovery. For the week (Wednesday-Wednesday), prices
in the production regions generally fell between 2 and 7 cents per MMBtu. After
dropping to $2.82 per MMBtu on Monday, the spot price at the Henry Hub gained
16 cents in the past two trading sessions to average $2.98 per MMBtu on
Wednesday, July 17. With moderate weather dominating in the Midwest and
Midcontinent, spot prices in those regions similarly drifted lower by 5 percent
or less for the week. Despite the general downward price trend across the
country, prices in the Rockies and parts of the Northwest had been so low that
a heat wave in the regions increased prices by up to 60 cents per MMBtu for the
week. However, prices there remain among the lowest in the country. The spot
price at Opal, Wyoming, increased 35 cents per MMBtu or 29 percent to an
average of $1.56 yesterday. After
dipping below the $1-mark in early July, the spot price on Northwest Pipeline
in Sumas, Washington, recovered an additional 27 cents or 20 percent this week
to trade at an average of $1.56 per MMBtu on Wednesday. The Northeast also was
affected by hot temperatures with prices at many trading locations increasing
between 10 and 15 cents on the week, with some notable exceptions. Prices at
the New York citygate climbed to $3.86 per MMBtu yesterday, about 55 cents or
16 percent higher than the average price a week ago.
At the NYMEX, the price of
the futures contract for August delivery at the Henry Hub dropped 2 cents
during the week to settle at $2.841 per MMBtu on Wednesday, June 17. With
storage inventories remaining considerably above the 5-year average, futures
prices have declined since the spring. For the second week in a row, the August
contract dipped to its lowest level since early March. At its Wednesday closing
price, the price of the August contract is down 28 percent from its recent high
point of $3.948 per MMBtu recorded on May 14. The January 2003 futures contract
dropped $0.029 per MMBtu on the week to close at $3.706 on Wednesday. However,
the spread between the August and January 2003 contracts remains substantial.
In trading early this week, the spread was as high as $0.92 per MMBtu, with a
difference of $0.87 per MMBtu yesterday (July 17).
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
11-Jul |
12-Jul |
15-Jul |
16-Jul |
17-Jul |
|
Henry Hub |
2.85 |
2.86 |
2.82 |
2.89 |
2.98 |
New York |
3.10 |
3.11 |
3.18 |
3.59 |
3.86 |
Chicago |
2.79 |
2.78 |
2.78 |
2.88 |
2.97 |
Cal. Comp. Avg,* |
2.62 |
2.47 |
2.57 |
2.69 |
2.76 |
Futures ($/MMBtu) |
|
|
|
|
|
Aug delivery |
2.830 |
2.787 |
2.784 |
2.863 |
2.841 |
Sept delivery |
2.869 |
2.830 |
2.825 |
2.892 |
2.862 |
*Avg. of NGI's reported
avg. prices for: Malin, PG&E
citygate, |
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and Southern California
Border Avg. |
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Source: NGI's Daily Gas
Price Index (http://intelligencepress.com). |
Storage:
Working gas in storage was 2,422 Bcf for the week
ending July 12, according to EIA's Weekly Natural Gas Storage Report. For the entire Lower 48 States, the implied
net injection for the week was 69 Bcf, or about 13 percent below the 5-year
average of 79 Bcf for the week. Because injection activity fell short of last
year's net injection of 101 Bcf for the comparable week, the year-on-year
surplus fell to 347 Bcf. Estimated inventories are 366 Bcf, or 17.8 percent,
higher than the 5-year average of 2,056 Bcf. (See Storage Figure) In the Consuming West region, net injections
for the week were 55 percent lower than last year as high temperatures
throughout the region likely spurred higher cooling demand in the region. In
the West, temperatures were 20 to 40 percent hotter than normal as measured by
cooling degree days (CDDs) for the week ending July 13. (See
Temperature Map) (See Deviation Map)
CDDs in the New England region were 41 percent higher than last year for the week.
All Volumes
in Bcf |
Current
Stocks 7/12/2002 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Net Change
from Last Week |
One-Week
Prior Stocks 7/5/02 |
|
East Region |
1,296 |
1,169 |
10.9% |
53 |
1,243 |
|
West Region |
338 |
284 |
19.0% |
9 |
329 |
|
Producing
Region |
788 |
603 |
30.7% |
7 |
781 |
|
Total Lower
48 |
2,422 |
2,056 |
17.8% |
69 |
2,353 |
|
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:
FERC approves Kern River
expansion: On Wednesday, July 17, the
Federal Energy Regulatory Commission (FERC) approved the Kern River 2003
Expansion Project, which will provide additional infrastructure to Western
markets. The pipeline expansion will cost $1.2 billion and add over 885 million
cubic feet per day of capacity to the Kern River system, bringing total system
capacity to more than 1.7 billion cubic feet per day. The Kern River pipeline
expansion will extend roughly 716 miles from Wyoming to California, running
through Nevada and Utah. The pipeline, which is expected to come on line by May
2003, will utilize six existing compressor stations and three new compressor
stations. FERC expects that the new
pipeline will allow local distribution companies to meet peak needs and deliver
natural gas to new electric generation plants. The pipeline is expected to
serve approximately 30 percent of the new generation coming on line in
southwestern California. Several supply basins will be interconnected by the
project, which will facilitate transporting gas from suppliers to consumers in
the West.
Summary:
Spot prices at most trading
locations along the Gulf Coast and the Southwest declined slightly during the
week since July 11. Exceptions to the general market trend included prices in
the Rockies and the Northeast, where high temperatures resulted in increased
cooling demand and price increases of up to 60 cents. The futures contract for
August delivery eased $0.023 per MMBtu on the week to close on Wednesday at
$2.841 per MMBtu. As of July 12, storage stocks were 2,422 Bcf, a level about
17.8 percent above the average for the past 5 years.