for week ending October 16, 2002 | Release date: October 17, 2002 | Previous weeks
Since Wednesday, October 10,
natural gas spot prices have increased at most locations in the Lower 48
States, climbing between 10 and 50
cents per MMBtu. For the week (Wednesday-Wednesday),
prices at the Henry Hub increased 19 cents or roughly 5 percent to $4.10 per
MMBtu. The price of the NYMEX futures
contract for November delivery at the Henry Hub has increased nearly 31 cents
since last Wednesday to settle at $4.227 per MMBtu yesterday (October 16). Natural gas in storage increased to 3,128
Bcf, which exceeds the 5-year average by slightly more than 8.5 percent. The spot price for West Texas Intermediate
(WTI) crude oil declined 30 cents per barrel or less than 1 percent since last
Wednesday to trade at $29.28 per barrel or $5.05 per MMBtu.
Spot prices generally
increased over the past 7 days despite price drops last Thursday and Friday as
mild temperatures heading into the Columbus Day holiday weekend mitigated
demand for natural gas. Prices
were at relatively high levels on Wednesday, October 9, driven principally by
lingering shut-ins resulting from Hurricane Lili, then declined as the week
progressed and production was restored. Prices rebounded on Monday, October 14, with gains of 30 to 57 cents per
MMBtu as wintry weather moved into some parts of the country. After being mostly flat on Tuesday, October
15, prices fell up to 15 cents on Wednesday, October 16. For the week (Wednesday to Wednesday), price increases were the largest in the
Midcontinent and Rocky Mountains regions, where the winter-like weather was the
coldest.
At the NYMEX, the price of the futures contract for November delivery at the Henry Hub has increased nearly 31 cents since Wednesday, October 9, to settle at $4.227 per MMBtu on Wednesday, October 16. Factors contributing to the increase in futures prices likely include the lower-than-normal injection of natural gas into storage reported last week, climbing spot prices, a cool weather forecast, and lingering concerns about supplies in the wake of Hurricane Lili. Prices of the futures contracts for delivery during the remaining months in 2002 and through the heating season have increased by roughly 18 to 31 cents per MMBtu since October 9, with the larger increases occurring for the more immediate months' contracts. Prices of the contracts for the peak winter months of December through February are more than 24 cents higher than the current Henry Hub spot price. This price differential provides an incentive for continued additions of natural gas to storage for the winter heating season.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
10-Oct |
11-Oct |
14-Oct |
15-Oct |
16-Oct |
|
Henry Hub |
3.94 |
3.79 |
4.19 |
4.20 |
4.10 |
New York |
4.24 |
4.05 |
4.45 |
4.53 |
4.39 |
Chicago |
3.94 |
3.81 |
4.23 |
4.25 |
4.18 |
Cal. Comp. Avg,* |
3.43 |
3.23 |
3.82 |
3.87 |
3.66 |
Futures ($/MMBtu) |
|
|
|
|
|
Nov delivery |
3.828 |
4.146 |
4.303 |
4.247 |
4.227 |
Dec delivery |
4.055 |
4.336 |
4.471 |
4.440 |
4.422 |
*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 3,128 Bcf for the week
ended Friday, October 11, 2002, according to the EIA Weekly Natural Gas
Storage Report. This is 8.5 percent
above the 5-year average for the report week, and almost 2 percent above the
level last year for the same week. (See Storage Figure) The implied net change was 48 Bcf,
which is roughly 17 percent below the 5-year average weekly change of 58 Bcf
for the report week. Implied net
injections were less than the 5-year average in the Consuming East and
Producing regions, falling 7 Bcf and 3 Bcf below the average build for the
report week, respectively. Meanwhile,
in the West region, injections were equal to the 5-year average. The below normal injections of natural gas
into storage likely can be attributed to the production curtailments resulting
from Hurricane Lili. However, the
impact of Lili on net injections likely was mitigated by the relatively mild
temperatures that prevailed across most of the country last week. (See Temperature Map) (See Deviation Map) If weekly net injections approximate the
5-year average of roughly 41 Bcf through the remainder of the refill season,
then working gas in storage will be close to 3,244 Bcf by the end of October
when the refill season ends. This would
exceed last year's working gas stocks entering the heating season by about 3
percent.
All Volumes
in Bcf |
Current
Stocks 10/11/02 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 10/04/02 |
|
East Region |
1,839 |
1,773 |
3.7% |
29 |
1,810 |
|
West Region |
412 |
354 |
16.4% |
6 |
406 |
|
Producing
Region |
877 |
758 |
15.7% |
13 |
864 |
|
Total Lower
48 |
3,128 |
2,884 |
8.5% |
48 |
3,080 |
|
Source: Energy Information Administration: Form EIA-912, "Weekly Underground
Natural Gas Storage Report," and the Historical Weekly Storage Estimates
Database. Row and column sums may not
equal totals due to independent rounding. |
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Report on Nova Scotia
Natural Gas Reserves: According to a report commissioned by the Canada-Nova Scotia
Offshore Petroleum Board, undiscovered gas reserves in the offshore region of
Nova Scotia could range from 15 to 41 trillion cubic feet (Tcf). The report
titled, "Hydrocarbon Potential of the
Deep-Water Scotian Slope", was released last week and contains
assessments that would double earlier natural gas estimates and also add
significantly to the expected oil recovery potential. In 2001, over 152 Bcf of
natural gas produced at the Sable Island project off Nova Scotia was imported
into the United States at Calais, Maine, an increase of 22 percent from the
previous year's 124 Bcf.
Natural Gas Rig Counts: The number of rigs drilling for natural gas
declined to 709 for the week ending October 11, according to Baker-Hughes
Incorporated. This is the lowest rig count since 697 was reported for the week
ended June 28, 2002. After reaching a recent high of 746 for the week ended
September 13, the number of rigs drilling for natural gas has trended down in 3
of the past 4 weeks. It has declined 24
percent from a year ago at this time when Baker-Hughes reported that 933 natural
gas drilling rigs were in operation. Despite this year's declines, the number
of active natural gas drilling rigs remains close to the monthly average of 720
for the year 2000 and well above 1999's average of 436. The share of rigs
drilling for natural gas has remained above 80 percent since May 2001, and last
week's average of 83.5 percent continued this trend. The emphasis on gas
exploration and development generally reflects a relative advantage in the
economics of natural gas prospects compared with domestic crude oil prospects.
Summary
Spot prices climbed during
the week since October 9 with increases of over 10 cents at most market
locations. The futures contract price
for November delivery increased by 31 cents, settling at $4.227 per MMBtu. As of October 11, working gas storage stocks
were 3,128 Bcf, a level well above the maximum for this week during the past 5
years.
Natural Gas Summary from the
Short-Term Energy Outlook