for week ending August 7, 2002 | Release date: August 8, 2002 | Previous weeks
Since Wednesday, July 31,
natural gas spot prices have declined at most locations in the Lower 48 States,
generally falling between 17 and 41 cents. However, steeper declines were recorded at some market locations. For the week (Wednesday-Wednesday), prices
at the Henry Hub fell 31 cents or nearly 14 percent to $2.73 per MMBtu. Principally moderating temperatures since
Monday, August 5 drove price drops at most locations. The price of the NYMEX futures contract for
September delivery at the Henry Hub decreased over 29 cents since last
Wednesday to settle at $2.660 per MMBtu yesterday. Natural gas in storage increased to 2,567 Bcf, which exceeds the
5-year average by more than 15 percent. The spot price for West Texas Intermediate (WTI) crude oil moved down 44
cents per barrel or almost 2 percent since last Wednesday, trading at $26.58
per barrel or $4.58 per MMBtu.
Prices:
Spot prices have declined
steadily since late last week as a scorching heat-wave subsided, mitigating
cooling demand for natural gas and leading to week-to-week (Wednesday to
Wednesday) drops of 17 to 41 cents at most markets. Prices began the week at relatively high levels,
driven principally by soaring temperatures in most of the country, and tapered
off gradually heading into the weekend as temperatures moderated at most market
locations. This was followed by more pronounced
declines in prices since Monday, August 5, as a cool front from Canada swept
across most of the eastern two-thirds of the United States. The largest drop in price since last
Wednesday occurred in New York, where prices fell $4.03 or 57 percent to
average $3.04 on Wednesday, August 7. In contrast to the overall pattern of
decreases, prices climbed by up to 35 cents per MMBtu at some markets in the
Rockies and by 4 cents at Malin, Oregon.
At the NYMEX, the price of the futures contract for
September delivery at the Henry Hub fell by over 29 cents during the week to
settle at $2.660 per MMBtu on Wednesday, August 7. This is the lowest price for the September futures contract since
March 1, 2002. Factors contributing to the decline in futures prices likely
include the unusually high volumes of natural gas in storage and falling spot
prices. Prices of the futures contracts for delivery during the remaining
months in 2002 and through the heating season have fallen by 10 to 14 cents per
MMBtu since last Wednesday, July 31. Prices of the contracts for the peak winter months of December through
February are more than 64 cents above the current Henry Hub spot price. This relative price pattern remains a strong
incentive for continued additions of natural gas to storage for the winter
heating season.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
1-Aug |
2-Aug |
5-Aug |
6-Aug |
7-Aug |
|
Henry Hub |
3.07 |
2.91 |
2.81 |
2.79 |
2.73 |
New York |
5.97 |
3.69 |
3.25 |
3.18 |
3.04 |
Chicago |
3.04 |
2.85 |
2.76 |
2.73 |
2.65 |
Cal. Comp. Avg,* |
2.74 |
2.53 |
2.57 |
2.54 |
2.48 |
Futures ($/MMBtu) |
|
|
|
|
|
Sept delivery |
2.842 |
2.858 |
2.678 |
2.716 |
2.660 |
Oct delivery |
2.874 |
2.885 |
2.720 |
2.755 |
2.704 |
*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 2,567 Bcf for the week
ended Friday, August 2, 2002, according to the EIA Weekly Natural Gas
Storage Report. This is 15 percent
above the 5-year average for the report week, and almost 12 percent above the
level last year for the same week. The
implied net change was 33 Bcf, which is roughly 39 percent below the 5-year average
weekly change of 54 Bcf for the report week. Implied net injections were less than the 5-year average in the East and
Producing regions, falling 11 Bcf and 13 Bcf below the average build for the
report week, respectively. Meanwhile,
in the West region, injections were 3 Bcf above the 5-year average. Warmer-than-normal temperatures in most
regions of the country likely helped reduce net injections in the East and
Producing regions, while cooler-than-normal temperatures in some parts of the
West region helped increase injections. On average, cooling degree-days were almost 26 percent above normal in
the Lower 48 States for the week ended August 1. The principal exception to this pattern occurred in the Pacific
U.S. Census Region, where cooling degree-days were almost 13 percent below
normal. (See Storage Figure) (See Temperature Map) (See Deviation Map)
All Volumes
in Bcf |
Current
Stocks 8/2//2002 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 7/26/02* |
|
East Region |
1,414 |
1,309 |
8.0% |
33 |
1,381 |
|
West Region |
360 |
300 |
20.0% |
8 |
352 |
|
Producing
Region |
793 |
622 |
27.5% |
-8 |
801 |
|
Total Lower
48 |
2,567 |
2,231 |
15.1% |
33 |
2,534 |
|
* Revised. Source: Energy Information Administration: Form EIA-912, "Weekly Underground Natural Gas Storage
Report," and the Historical Weekly Storage Estimates Database. |
||||||
Other Market Trends:
Natural gas consumption in manufacturing grew by over 8 percent between
1994-98. According to the EIA
report Energy
Use in Manufacturing: 1994 to 1998 released August 1, 2002,
natural gas use increased by 8.4 percent compared with total fuel consumption
growth of 7 percent. The two main uses of natural gas by manufacturers are
boiler fuel and process heating, which accounted for 89 percent of their gas
consumption in 1998, up from 86 percent in 1994. The increase in total energy
use was driven primarily by growth in the consumption of natural gas and
electricity, with the latter increasing by 14.4 percent. During this period, U.S. manufacturers used
less petroleum and coal in manufacturing processes. This expansion of gas use occurred although natural gas prices to
manufacturing consumers increased by more than 6 percent during the period,
rising to an annual average of $2.82 per Mcf in 1998 compared with $2.65 in
1994, while the cost of other major fossil fuels (petroleum products and coal)
declined between 5 and 21 percent. The cost of electricity also moved down,
declining over 4 percent.
Comment Period for Potential
New Revision Policy Closes On August 12: 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 consideration of EIA’s potential new policy for revisions of the WNGSR. Comments must be filed by August 12, 2002.
Summary:
Spot prices fell at most
market locations during the week since July 31 with decreases ranging between
17 and 41 cents. The futures contract
price for September delivery fell by more than 29 cents, settling at $2.660 per
MMBtu. As of August 2, storage stocks
were 2,567 Bcf, a level well above the maximum for this week during the past 5
years.