for week ending September 11, 2002 | Release date: September 12, 2002 | Previous weeks
Natural gas spot prices have
moved up by 10 to 25 cents at most trading locations since Wednesday, September
4. For the week (Wednesday-Wednesday), the average Henry Hub price climbed
$0.20 per MMBtu to $3.32 as Tropical Storm Fay temporarily threatened Gulf area
production activity and late-season high temperatures triggered cooling demand
in key market areas. The price of the NYMEX futures contract for October
delivery at the Henry Hub increased a more moderate $0.057 per MMBtu since last
Wednesday to settle at $3.250 yesterday. Natural gas in storage increased to
2,855 Bcf, which exceeds the 5-year average by nearly 12.3 percent. The spot
price for West Texas Intermediate (WTI) crude oil rose $1.49 per barrel to
$29.77, or $5.13 per MMBtu.
Spot prices this week
(Wednesday-Wednesday) recovered much of the previous week's losses as hot weather
returned to many regions and Tropical Storm Fay stirred fears of possible
production shut-ins. The Henry Hub spot price climbed 19 cents to an average of
$3.38 per MMBtu last Friday, the highest price at the hub for the week, as
Tropical Storm Fay threatened production fields near Galveston, Texas. However,
Fay's strength diminished by the next day, and few producers reported shutting
in production, according to the Minerals Management Service. Adding to the cash
market's strength, hot weather returned to both coasts as temperatures this
weekend hit the 90s in parts of California and in New York. For the week, the
spot price at the Southern California border gained 20 cents to an average of
$3.11 per MMBtu yesterday (Wednesday, September 11). The spot price at the New
York citygate climbed $0.16 per MMBtu to an average of $3.60. Rockies prices
suffered yet another downturn this week as infrastructure maintenance limited
outlets for supplies. Before a mild recovery yesterday, the spot price in Opal,
Wyoming, dropped to as low as 67 cents per MMBtu earlier this week. The
region's oversupply was compounded by Questar's directive that all holders of
interruptible storage would have to empty their supplies from the Clay Basin
storage facility because of high storage inventories. Prices at the Questar
trading point dropped to an average of 55 cents per MMBtu on Tuesday. Prices on
El Paso Natural Gas in the Southwest plummeted on the week as supplies were
diverted to the pipeline owing to maintenance on Transwestern Pipeline. On the
week, the El Paso non-Bondad trading point in New Mexico suffered the biggest
decline, falling 46 cents to $2.16 per MMBtu.
At the NYMEX, the price of the futures contract for
October delivery at the Henry Hub increased $0.057 per MMBtu on the week to a
close of $3.250 yesterday. The near-month contract this week benefited from
fears of slowing production and strong prices for crude oil, which rose to near
$30 this week owing to reports of relatively low U.S. oil stocks. Concerns over
a possible U.S. invasion of Iraq and the renewed fears of terrorism also
appeared to contribute to strength in oil prices, which have increased by $2.01
per barrel since the beginning of the month. After a delayed opening yesterday
in recognition of the September 11 anniversary ceremonies, the October contract
yesterday recorded a loss in value of slightly less than 11 cents per MMBtu.
The futures contract for November closed at $3.645 per MMBtu, down 8.9 cents on
the day. The 12-month strip, which is the average cost for futures contracts
over the next year, moved down 6.4 cents to $3.796 per MMBtu.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
5-Sep |
6-Sep |
9-Sep |
8-Sep |
9-Sep |
|
Henry Hub |
3.19 |
3.38 |
3.24 |
3.35 |
3.32 |
New York |
3.50 |
3.75 |
3.62 |
3.62 |
3.60 |
Chicago |
3.20 |
3.40 |
3.23 |
3.36 |
3.35 |
Cal. Comp. Avg,* |
2.96 |
3.07 |
2.98 |
3.12 |
3.13 |
Futures ($/MMBtu) |
|
|
|
|
|
Oct delivery |
3.342 |
3.265 |
3.399 |
3.356 |
3.250 |
Nov delivery |
3.654 |
3.605 |
3.744 |
3.734 |
3.645 |
*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 2,855
Bcf or 12.3 percent above the 5-year average for the week ending September 6,
according to EIA's Weekly Natural Gas
Storage Report. (See Storage Figure) With temperatures in many areas of the
country much hotter than last year as measured by cooling degree days (CDDs),
the implied net injection for the week was 74 Bcf, which is 4.2 percent higher
than the 5-year average injection for the week of 71 Bcf. CDDs were 20 percent
higher than the comparable week last year for the country as a whole, but
almost double in the Upper Plains region for the week ending September 7. (See Temperature Map)
(See Deviation Map) With summer heat dissipating, the industry
has historically boosted injections during September. Storage stocks are 183
Bcf higher than a year ago and 313 Bcf
higher than the 5-year average for the week.
All Volumes
in Bcf |
Current
Stocks 9/6//2002 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 8/30/02 |
|
East Region |
1,642 |
1,546 |
6.2% |
52 |
1,590 |
|
West Region |
390 |
324 |
20.4% |
9 |
381 |
|
Producing
Region |
823 |
671 |
22.7% |
13 |
810 |
|
Total Lower
48 |
2,855 |
2,542 |
12.3% |
74 |
2,781 |
|
Source: Energy Information Administration: Form EIA-912, "Weekly Underground Natural
Gas Storage Report," and the Historical Weekly Storage Estimates
Database. |
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FERC
Proposes Plan To Protect Critical Energy Infrastructure Information: After
examining the issue for nearly a year in the wake of the terrorist attacks of
September 11, 2001, the Federal Energy Regulatory Commission (FERC) last week
proposed to establish regulations that would limit access to information about
the nation's energy infrastructure. In its Notice of Proposed Rulemaking
(NOPR), FERC defines "critical energy infrastructure information (CEII)" as
information about proposed or existing critical infrastructure that:
The NOPR proposes procedures
for requesting confidential treatment of CEII, and sets forth a method for
handling challenges to the designation of certain information as CEII. The stated overall objective is to protect
information designated sensitive, while still allowing efficient access to such
information by those with a valid "need to know." In many cases the CEII designation will require the removal of
certain information from the public domain.
Natural Gas Summary from the
Short-Term Energy Outlook:
EIA projects that natural
gas wellhead prices will range between $2.71 and $2.75 per MMBtu through
October and then increase to $2.92 in November as the heating season gets
underway (Short-Term Energy Outlook, September 2002). Prices
remained above $2.90 during the last half of August as unusually hot weather
across the nation resulted in added cooling demand, placing upward pressure on
prices. Now that the summer is nearly over, cooling demand should be tapering
off, while at the same time, the heating season has not yet begun. Overall in
2002, wellhead prices are expected to average about $2.73 per MMBtu compared
with $4.00 in 2001. Prices during the upcoming heating season (November through
March), assuming normal weather, are expected to average $3.20 per MMBtu, which
is about $0.84 higher than last winter's price.
Domestic
dry natural gas production is projected to fall by about 1.7 percent in 2002
compared with the 2001 growth rate of 2.4 percent. Lower natural gas prices
have reduced production and resource development incentives from their highs of
last year. Still, current supplies, including natural gas in storage, appear to
be at very comfortable levels. Working gas in storage has exceeded the highest
levels recorded in the previous 5 years since the beginning of the year. By the
end of August, working gas storage stocks were about 2,781 Bcf, which is 12.5
percent above the 5-year average and 205 Bcf higher than a year ago. Moreover,
natural gas-directed drilling, while down from the record levels of mid 2001,
is still quite strong by a longer historical perspective. The gas rig count as
of August 30, 2002, was 741, which is 25 percent above the recent low of 591
for the week of April 5, 2002. In 2003, production is expected to rebound by
3.2 percent as demand rises and inventories fall back closer to normal
Natural gas demand is
expected to increase sharply in November and December and early 2003 because of
the expected continuation of solid recovery in the U.S. industrial economy by
the fourth quarter of this year and the return of colder weather. The expected
increase in natural gas demand for the coming winter, assuming normal weather,
is 12 percent above the year-ago level. Natural gas demand for the entire year
2002 is projected to increase by 3.3 percent over 2001 levels in large part
because of increased demand for natural gas for power generation. In 2003,
natural gas demand growth is expected to increase by 3.6 percent, as the
economy continues to recover. Natural gas demand growth is expected across all
sectors, with the exception of the electric utility sector. This is because of
the still ongoing transfer of ownership of electric power plants from utilities
to independent power producers (included in the industrial sector) that stems
from deregulation.
Monthly Natural Gas
Market Summary |
|
|
|
|
|
|
|
History |
Projections |
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|
Jun-02 |
Jul-02 |
Aug-02 |
Sep-02 |
Oct-02 |
Nov-02 |
PRICES
($/MMBtu) |
|
|
|
|
|
|
Average Wellhead Price |
2.88 |
2.81 |
2.74 |
2.71 |
2.75 |
2.92 |
Residential Price |
8.80 |
9.23 |
9.43 |
9.07 |
8.09 |
7.44 |
Electric Utilities Price |
3.26 |
3.02 |
2.89 |
2.82 |
2.92 |
3.25 |
|
|
|
|
|
|
|
SUPPLY
(Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry Gas Prod |
1.55 |
1.60 |
1.59 |
1.54 |
1.60 |
1.57 |
Net Imports |
0.25 |
0.28 |
0.28 |
0.27 |
0.28 |
0.27 |
Imports |
0.29 |
0.32 |
0.33 |
0.31 |
0.33 |
0.32 |
Exports |
0.04 |
0.04 |
0.05 |
0.05 |
0.05 |
0.05 |
Suppl. Gaseous Fuels |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
Total New Supply |
1.809 |
1.881 |
1.886 |
1.813 |
1.884 |
1.853 |
|
|
|
|
|
|
|
Working Gas in Storage |
|
|
|
|
|
|
Opening |
1.968 |
2.308 |
2.558 |
2.774 |
3.057 |
3.220 |
Closing |
2.308 |
2.558 |
2.774 |
3.057 |
3.220 |
3.069 |
Net Storage Withdrawal |
-0.340 |
-0.249 |
-0.216 |
-0.283 |
-0.163 |
0.151 |
|
|
|
|
|
|
|
Total Supply |
1.469 |
1.631 |
1.669 |
1.530 |
1.721 |
2.004 |
|
|
|
|
|
|
|
Balancing Item |
0.024 |
0.020 |
0.025 |
0.049 |
-0.075 |
-0.080 |
|
|
|
|
|
|
|
Total Primary Supply |
1.493 |
1.651 |
1.694 |
1.579 |
1.647 |
1.924 |
|
|
|
|
|
|
|
DEMAND
(Trillion Cubic Feet) |
|
|
|
|
|
|
Lease & Plant Fuel |
0.097 |
0.102 |
0.104 |
0.103 |
0.107 |
0.105 |
Pipeline Use |
0.034 |
0.037 |
0.038 |
0.035 |
0.039 |
0.050 |
Delivered to Consumers |
1.361 |
1.512 |
1.552 |
1.441 |
1.500 |
1.769 |
Residential |
0.175 |
0.145 |
0.136 |
0.151 |
0.224 |
0.449 |
Commercial |
0.155 |
0.152 |
0.150 |
0.152 |
0.195 |
0.286 |
Industrial |
0.768 |
0.867 |
0.925 |
0.895 |
0.896 |
0.894 |
Elec Utility |
0.264 |
0.348 |
0.340 |
0.243 |
0.185 |
0.140 |
Total Demand |
1.493 |
1.651 |
1.694 |
1.579 |
1.647 |
1.924 |
Source: Energy Information Administration, Short-Term Energy Outlook, September 2002.