for week ending October 30, 2002 | Release date: October 31, 2002 | Previous weeks
Spot and futures prices
fluctuated over the past week (Wednesday, October 23 to Wednesday, October 30),
with cash prices moving up from 6 to 35 cents per MMBtu at most market locations
in response to rising demand from colder-than-normal temperatures, while
futures prices for contracts for delivery through the impending heating season
drifted lower. At the Henry Hub, the
average spot price rose 9 cents from the previous Wednesday (October 23) to
$4.33 per MMBtu in yesterday's (October 30) trading. The expired near-month contract for November delivery ended
trading on Tuesday, October 29 at $4.126 per MMBtu, recording a net gain of
$0.085 since beginning as the prompt month contract on September 27. The new near-month contract, for December
delivery, began with a gain of just under 13 cents, to settle at $4.389 per
MMBtu. Natural gas in storage as of Friday, October 25 increased to 3,172 Bcf,
which exceeds the 5-year average by 6.3 percent. In contrast to natural gas spot prices, crude oil prices
continued to soften. After dropping
over $1 per barrel the previous week, the average spot price for West Texas
Intermediate (WTI) crude oil fell another $1.36 per barrel to end trading on
Wednesday, October 30 at $26.85, or $4.63 per MMBtu.
After significant declines on Friday (October 25),
which saw spot prices fall 10 to 30 cents at most major market locations, cash
prices trended upward through yesterday (October 30). Colder-than-normal temperatures throughout much of the
Mid-continent, Midwest and Rockies, as well as the Northeast and southward into
the Mid-Atlantic states, strengthened demand over the past 3 days, pushing
prices upward. Daily high temperatures
at major-market cities such as Chicago and New York were in the 40s and low
50s, with daily average temperatures ranging from 2 to 10 degrees below
normal. Week-to-week price increases in
the Midwest and Mid-continent averaged 19 cents per MMBtu, while Northeast
market locations showed increases ranging from 24 to 44 cents per MMBtu. However, the largest price increases for the
week were seen in the Rockies, where winter-like conditions and strengthening
demand from both Mid-continent and Western markets sent prices skyward. Many Rockies locations recorded increases of
over $1 per MMBtu, with prices at some locations exceeding $4 per MMBtu-levels not seen in this region since early May
2001.
On the futures market, the November contract ended trading on Tuesday, October 29 with a loss of a nickel, to close out at $4.126 per MMBtu. During its reign as the near-month contract, the November contract's daily settlement price ranged between $3.724 and $4.303 per MMBtu. For the week, the futures contracts for delivery in months from December 2002 through April 2003 all showed slight declines of around 5 cents or less. The new near-month contract, for December delivery, scored strong gains of over a dime per session in two of three trading sessions since Friday, October 25, but for the week was down $0.051 per MMBtu, settling yesterday at $4.389.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
24-Oct |
25-Oct |
28-Oct |
29-Oct |
30-Oct |
|
Henry Hub |
4.31 |
4.11 |
4.17 |
4.19 |
4.33 |
New York |
4.85 |
4.57 |
4.80 |
4.95 |
5.16 |
Chicago |
4.46 |
4.26 |
4.34 |
4.39 |
4.48 |
Cal. Comp. Avg,* |
4.14 |
3.97 |
4.06 |
4.14 |
4.25 |
Futures ($/MMBtu) |
|
|
|
|
|
Nov delivery |
4.133 |
4.028 |
4.176 |
4.126 |
expired |
Dec delivery |
4.300 |
4.188 |
4.329 |
4.261 |
4.389 |
Jan delivery |
4.385 |
4.278 |
4.409 |
4.346 |
4.457 |
*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 storage levels reached 3,172 Bcf for the
week ended Friday, October 25, according to EIA's Weekly Natural Gas Storage
Report. Current inventories exceed
the 5-year (1997-2001) average by 6.3 percent, down over a percentage point at
the national level from last week.(See Storage Figure)
For the first time this refill season,
stocks in a region fell behind last year's levels, as East region stocks stood
at an estimated 1,867 Bcf, 3 Bcf lower than last year at this time. Implied net injections for the report week
were 11 Bcf, which is significantly lower than both the 5-year average and last
year's injection for this week. Early near-winter conditions boosted heating
demand, likely contributing to lower-than-average net injections. Generally
colder-than-normal temperatures lingered from the previous week throughout the
report week. Total U.S. gas-weighted
heating degree-days were 27 percent higher than normal, compared with the
previous week's 36 percent greater than normal. Cold weather spread into New England and further into the Middle
Atlantic states and to much of the Pacific coast as well, while bringing high
temperatures of below freezing for several days to an area encompassing the
Northern Plains states down into northern Oklahoma. (See
Temperature Map) (See Deviation Map)
The 11 Bcf implied net injection is
nearly 73 percent below the 5-year average of 40 Bcf.
All Volumes
in Bcf |
Current
Stocks 10/25/02 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 10/18/02 |
|
East Region |
1,867 |
1,829 |
2.1% |
8 |
1,859 |
|
West Region |
416 |
360 |
15.6% |
1 |
415 |
|
Producing
Region |
889 |
793 |
12.1% |
2 |
887 |
|
Total Lower
48 |
3,172 |
2,983 |
6.3% |
11 |
3,161 |
|
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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The Federal Energy
Regulatory Commission (FERC) Presents Assessment of the Midwestern Energy
Infrastructure: FERC's Office of Market Oversight & Investigations presented
its assessment of the Midwestern energy infrastructure on Wednesday, October
30. In the report titled, Midwestern
Energy Infrastructure Assessment, FERC staff found that adequate pipeline
and storage capacity exists to meet market needs in the 15-state Midwestern
region, which encompasses the West and East North Central U.S. Census regions,
and Oklahoma, Kentucky, and West Virginia. Of the 5.8 Tcf of natural gas consumed in the region during 2000, 2.8
Tcf was produced indigenously, 1.3 Tcf was imported from Canada, and the
remainder was shipped principally from states in the Southeast and West. According to FERC staff, total pipeline
capacity in the region is roughly 33.8 Bcf per day. Since 2001, five major projects have been certificated, adding
1,914 MMcf per day. One of these
projects, Trailblazer, is already in operation, while the others are in various
stages of construction. Another three
major projects, adding 940 MMcf per day of projected capacity, are pending
before the Commission. In addition, six
major projects "are on the horizon," which could add up to 5,609 MMcf per day
of transportation capacity and 480 MMcf per day of storage deliverability. These additions in pipeline capacity should
help meet the increasing demand from the electric generating sector, which is
the fastest growing sector in the region. Gas-fired electric generation capacity accounts for 45,000 megawatts
(MW) or nearly 18 percent of the electric generation in the region. Another 39,240 MW of new gas-fired
generation capacity is planned through the year 2004, nearly 91 percent of new
capacity additions for the period.
Summary:
Persistent colder-than-normal temperatures in many
high-gas-consuming areas of the nation pushed spot prices higher, while futures
prices for delivery in the upcoming heating season were down slightly. Net implied injections into storage were
modest, but inventory levels remain above the 5-year average.
Natural Gas Summary from the
Short-Term Energy Outlook