Despite sizeable drops in both spot and futures
contract prices in the past two days, week-on-week (Wednesday, August 21 to
Wednesday August 28) increases were recorded in both cash and futures
markets. Temperatures which had begun
to moderate even before Thursday, August 22, particularly in the Northeast and
West regions, seemed finally to begin exerting downward pressure on
prices. For the week, the spot price at
the Henry Hub gained $0.11 per MMBtu to average $3.33 yesterday (Wednesday,
August 28). The NYMEX futures contract
for September delivery expired yesterday at the closing price of $3.288 per
MMBtu, up only $0.014 from the previous Wednesday’s settlement. The Energy Information Administration’s
(EIA) Weekly Natural Gas Storage Report showed total stocks of 2,716 Bcf
for the week ended Friday, August 23, which is 13 percent above the 5-year
average. The run-up in the spot price of West Texas Intermediate (WTI) crude
oil that resulted in an increase of $2.18 per barrel over the previous week was
almost completely offset this past week, as the WTI spot price fell $2.06 per
barrel to end trading on Wednesday, August 28 at an average price of $28.31 per
barrel, or $4.88 per MMBtu.
The three-day trend of generally
rising cash prices that began on Thursday, August 22, was abruptly reversed in
the past two days, as sharply dropping futures prices and easing of
weather-driven swing demand took their toll on spot prices. Price decreases of less than a dime at most
market locations on Tuesday, August 27 accelerated to the 12-22 cent per MMBtu
range on Wednesday, August 28.
Nonetheless, owing to the strength of the previous increases, prices in most markets were higher for the
week, but generally by a dime or less.
At 11 cents per MMBtu, the Henry Hub spot price increase was
significantly higher than the average increase of 5 cents for locations on the
Gulf Coast. Likewise, Midcontinent
increases averaged 6 cents per MMBtu, to an average price of $3.04 in this
region. Increases were a bit higher in
the Midwest, where average temperatures were actually higher than in the
previous week in many Midwest cities.
The average spot price at the Chicago citygate increased $0.14 per MMBtu
to $3.25 per MMBtu. Spot price increases
were higher also in California, as very hot weather in the desert Southwest
continued and supply out of the Rocky Mountains region was cut back by various
pipeline maintenance projects. The
Southern California Border Average spot price increased 17 cents per MMBtu to
$3.07. Conversely, prices were down in
the gas-glutted Rockies (to a regional average of $1.54 per MMBtu for the week)
and in the much-cooler Northeast. The
average spot price for New York delivery dropped $0.18 to $3.49 per MMBtu.
On the
NYMEX, two consecutive days of sharply dropping prices brought the September
contract down from its highest settlement price as the near-month contract of
$3.617 on Monday, August 26 to its expiration price of $3.288 per MMBtu
yesterday (August 28). Nonetheless, for
the week the September contract gained $0.014 per MMBtu, marking the third
straight week of week-on-week increases.
Since becoming the near-month contract on July 30, the September
contract price gained $0.397 per MMBtu, or nearly 14 percent. The contract for October delivery, which
begins as the near-month contract today, settled yesterday at $3.408 per
MMBtu. The highest-priced gas through
the upcoming heating season was for January delivery, at $4.038 per MMBtu.
|
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
|
22-Aug |
23-Aug |
26-Aug |
27-Aug |
28-Aug |
|
|
Henry Hub |
3.38 |
3.49 |
3.51 |
3.48 |
3.33 |
|
New York |
3.76 |
3.78 |
3.74 |
3.67 |
3.49 |
|
Chicago |
3.23 |
3.35 |
3.42 |
3.39 |
3.25 |
|
Cal. Comp. Avg,* |
2.93 |
3.01 |
3.15 |
3.11 |
3.05 |
|
Futures ($/MMBtu) |
|
|
|
|
|
|
Sept delivery |
3.515 |
3.487 |
3.617 |
3.483 |
3.288 |
|
Oct delivery |
3.591 |
3.543 |
3.676 |
3.531 |
3.403 |
|
*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). |
|||||
Working gas in storage reached 2,716 Bcf for the
week ended August 23, according to EIA’s Weekly Natural Gas Storage Report,
which is 13 percent above the 5-year average.
Current stocks exceed the 5-year average by 307 Bcf. (See
Storage Figure).
Although this is a decline from the late-March difference of 455 Bcf,
total stocks remain 82 Bcf above the maximum level of the previous 5 years. The
implied net injection for the week was 59 Bcf, which is equal to the prior
5-year (1997-2001) average, and exceeded last week’s implied net injection by
22 Bcf. This ends an 8-week run in
which net injections were below the 5-year average. Temperatures during the report week, while still above normal for
most Census divisions, represented moderation from the levels of the previous
week (ended August 17), according to the latest cooling-degree-day (CDD) data
from the National Weather Service. (See Temperature Map)
(See Deviation Map) The relative relief from the extreme heat
occurred in the relatively high gas-consuming areas of the Middle Atlantic, New
England, and the Pacific Census divisions.
In the Middle Atlantic and Pacific divisions, CDDs with respect to
normal fell by nearly 50 percentage points, while in the New England Census
division, this measure fell by over 100 percentage points (from 250 percent to
139 percent of normal).
|
All Volumes
in Bcf |
Current
Stocks 8/23//2002 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 8/16/02 |
|
|
East Region |
1,537 |
1,450 |
6.0% |
43 |
1,494 |
|
|
West Region |
376 |
315 |
19.4% |
8 |
368 |
|
|
Producing
Region |
803 |
644 |
24.7% |
8 |
795 |
|
|
Total Lower
48 |
2,716 |
2,409 |
12.7% |
59 |
2,657 |
|
|
Source: Energy Information Administration: Form EIA-912, "Weekly Underground
Natural Gas Storage Report," and the Historical Weekly Storage Estimates
Database. |
||||||
Western Gulf
Sale Attracts $151 Million in High Bids: Leases in the gas-prone
western Gulf of Mexico attracted $151 million in high bids during Lease Sale
184 on August 21, according to the Minerals Management Service (MMS). MMS
received a total of 391 bids on the approximately 22.3 million acres available offshore
Texas and Louisiana. Claiming success on the sale, MMS noted spirited bidding
particularly in the deepwater Alaminos Canyon area. About 39 percent of the
tracts receiving bids are located in the “ultra-deep water,” defined as depths
of more than 800 meters (approximately 2,624 feet). The deepest tract receiving
a bid was Alaminos Canyon Block 902, which is located in 2,996 meters of water
(9,827 feet), according to MMS. Garden Banks Block 337 attracted a combined bid
from Dominion Exploration and Production, Inc. and the U.S. subsidiary of Nexen
of $8.3 million, the highest bid during the sale. Top bidders included several
independent oil and gas companies such as Kerr-McGee (53 bids), Amerada Hess
(52 bids), and Pioneer Natural Resources (42 bids). MMS said that the 391 bids
received in the sale exceeded expectations and topped last year’s total of 386
bids.
Summary:
Cash prices gave up much of their
early-week gains, as cooler temperatures arrived in many high gas-consuming
areas and futures contract prices deflated rapidly. Storage levels remain
substantially above levels recorded in recent years.
Natural
Gas Summary from the Short-Term Energy Outlook
