for week ending November 13, 2002 | Release date: November 14, 2002 | Previous weeks
Warmer weather in many
regions of the country last weekend contributed to a continuation of the
November reprieve from October's steep rise in natural gas prices. Spot prices
eased 7 to 14 cents per MMBtu at most Gulf Coast and Southwest production-area
trading locations since Wednesday, November 6. Spot gas at the Henry Hub traded
at a steady $3.83 per MMBtu on each of the past 3 days. At $3.83 per MMBtu,
this price declined 10 cents for the week (Wednesday-Wednesday). Despite
considerable price swings within daily sessions this week, the price of the
NYMEX futures contract for December delivery at the Henry Hub increased a
moderate $0.023 per MMBtu for the week to $3.877. Natural gas in storage
decreased to 3,097 Bcf, which exceeds the 5-year average by 2.4 percent. A
general decline in energy prices, including a 91-cent per barrel decline in the
spot price for West Texas Intermediate (WTI) crude oil, followed yesterday's
decision by Iraq to accept the United Nations resolution on weapons
inspections. On the week, the WTI price fell 44 cents per barrel to $25.28, or
$4.36 per MMBtu.
October's steep increase in natural gas prices seems
a distant memory after two weeks of prices drifting lower in November. While prices at most production-area trading
locations eased about a dime or slightly more since last Wednesday (November
6), declines in market regions lacking heating load were steeper. The regional
average price for the Northeast fell 25 cents per MMBtu to $4.16. At New York
City, where the temperature reached 68 degrees on Sunday, the average price for
gas flows through the weekend dropped to $4.03 per MMBtu, which is the lowest
price at the citygate since the end of September. Price declines in the Midwest
were steep as well late last week, with the average price at the Chicago
citygate falling 13 cents per MMBtu to $3.72 for gas flow through the weekend.
However, slightly colder-than-expected weather early this week contributed to
the Chicago citygate price regaining 14 cents per MMBtu to an average of $3.86
yesterday (November 13). In the West, Rockies prices remained well above the extreme
lows last summer, but lost 10 to 25 cents per MMBtu for an average regional
price of $3.03, which was about 80 cents less than the Henry Hub price.
At the NYMEX, the price of the futures contract for
December delivery at the Henry Hub increased a slight $0.005 per MMBtu in
trading yesterday (Wednesday, November 13) to close at $3.877, which is just
over 2 cents higher than last Wednesday's close. Factors likely contributing to
the weakness in the contract included forecasts of warm weather across the
country along with a general decrease in energy prices following news that Iraq
had accepted the United Nations resolution requiring weapons inspections. At
its closing price yesterday, the December contract had lost almost 47 cents
since its open at $4.345 as the near-month contract on October 30. The futures
contracts for this winter registered slight gains of 1 to 2 cents per MMBtu on
the week.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
7-Nov |
8-Nov |
11-Nov |
12-Nov |
13-Nov |
|
Henry Hub |
3.91 |
3.77 |
3.83 |
3.83 |
3.83 |
New York |
4.28 |
4.03 |
4.14 |
4.20 |
4.21 |
Chicago |
3.85 |
3.72 |
3.83 |
3.85 |
3.86 |
Cal. Comp. Avg,* |
3.89 |
3.70 |
3.75 |
3.72 |
3.70 |
Futures ($/MMBtu) |
|
|
|
|
|
Dec delivery |
3.831 |
3.903 |
3.778 |
3.872 |
3.877 |
Jan delivery |
3.971 |
4.032 |
3.910 |
3.991 |
3.982 |
*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 3,097 Bcf, or 2.4 percent
above the 5-year average for the week ending November 8, according to EIA's Weekly
Natural Gas Storage Report. During the first full week of the unofficial
heating season, the implied net withdrawal was 48 Bcf. The decline in
inventories, the second net withdrawal this season, compares with a 5-year average
net injection of 19 Bcf for this week and an injection of 35 Bcf last year.
Across the country, temperatures were about 6 percent colder than normal as
measured by heating degree days (HDDs), according to the National Weather
Service. (See Temperature Map) (See Deviation Map) Moreover, in the key market regions of the
New England and Mid-Atlantic, temperatures were 25 and 23 percent colder than
normal, respectively. The cold weather in the East contributed to a 19 Bcf
reduction in regional inventories to 1,835 Bcf, which marks the first time this
year that storage inventories in the East Consuming Region have fallen below
the 5-year average. Although net injections are possible in the coming weeks,
it now appears that storage inventories peaked at 3,172 Bcf on October 25.
Although storage inventories of 3,097 Bcf are 90 Bcf lower than last year at
this time, inventories remain 74 Bcf above the 5-year average. (See
Storage Figure)
All Volumes
in Bcf |
Current
Stocks 11/08/02 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 11/01/02 |
|
East Region |
1,835 |
1,849 |
-0.8% |
-19 |
1,854 |
|
West Region |
410 |
366 |
12.0% |
-1 |
411 |
|
Producing
Region |
852 |
810 |
5.2% |
-28 |
880 |
|
Total Lower
48 |
3,097 |
3,024 |
2.4% |
-48 |
3,145 |
|
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. |
||||||
EIA Announces Policy for Revisions to Weekly
Natural Gas Storage Report: Following a review of comments
received, the Energy Information Administration on November 12, 2002, issued a Federal
Register that establishes a policy
for revisions to weekly estimates of working gas volumes held in underground
storage facilities at the national and regional levels disseminated in EIA's Weekly Natural Gas Storage Report
(WNGSR). Under this policy, revisions
shall be disseminated in the WNGSR according to the established schedule and
shall occur when the effect of reported changes is at least 7 billion cubic
feet (Bcf) at either a regional or national level. Revisions shall not be disseminated outside the established
schedule. EIA is deferring temporarily
further updates in estimation parameters, and is exploring ways to minimize
revisions, including analysis of the sensitivity of the estimates to parameter
changes. EIA will continue with the current estimation parameters and will
report revisions as a result of respondent changes only, until further change
is announced in the Weekly Natural Gas Storage Report.
Natural Gas Summary from the
Short-Term Energy Outlook:
EIA projects that natural
gas wellhead prices will average about $3.49 per MMBtu through December 2002
and then increase to $3.76 in January 2003, the peak demand month of the heating
season (Short-Term
Energy Outlook, released November 7, 2002). Natural gas prices were higher than
expected in October as storms in the Gulf of Mexico in late September
temporarily shut in some gas production, causing spot prices at the Henry Hub
and elsewhere to rise above $4.00 per million Btu for most of October. In
addition, early winter-like temperatures, particularly in the Midwest and
Northeast, increased demand for natural gas, placing upward pressure on gas
prices. Overall in 2002, wellhead prices are expected to average about $2.84
per MMBtu compared with $4.00 in 2001. Prices during the heating season
(November through March), assuming normal weather, are expected to average $3.56
per MMBtu, which is about $1.20 higher than last winter's price. Prices to
residential customers during the heating season are expected to average $7.81
per MMBtu compared with $7.14 last winter. In 2003, wellhead prices are
projected to average $3.28 per MMBtu, or about $0.44 per MMBtu more than in
2002, owing to expectations of increasing economic growth, little or no change
in the annual average crude oil price for 2003, and lower storage levels for
most of 2003 compared with 2002 levels.
Domestic dry natural gas
production is projected to fall by about 1.3 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.
However, current supplies appear to be at very adequate levels. Working gas in
storage has remained well above the previous 5-year average since the beginning
of the year. As of November 1, 2002, working gas stocks were 3,145 Bcf, which
exceeds the 5-year average by almost 5 percent despite net withdrawals during
the last week of October 2002. Furthermore, natural gas-directed drilling,
while down sharply from 2001 levels, is still quite strong by a longer
historical perspective. The weekly gas rig count in October averaged 709, down
from the September average of 736. But this is only slightly below the 2000
average of 720, which itself exceeds the level of average rigs running in any
year in the 1990s by at least 28 percent. In 2003, production is expected to
rebound by 2.6 percent as demand rises and inventories fall back closer to
normal.
Natural gas demand is
expected to increase through the rest of 2002 and into 2003 because of an
expected upswing in the U.S. industrial economy and the return of colder
weather. Overall in 2002, natural gas demand growth is projected to be 1.1
percent, as increased demand in the electric power sector and weather-related
demand in the residential and commercial sectors offset weakness in industrial
demand and declines in space-heating demand in the first part of 2002. Natural
gas demand in the combined residential and commercial sectors for the last 6
months of 2002 is expected to be 13.2 percent higher than 2001 levels. In 2003,
natural gas demand growth is expected to increase by 6.8 percent as the economy
continues to recover.
Short-Term Natural Gas Market
Outlook, November 2002
|
||||||
|
History |
Projections |
||||
|
Aug-02 |
Sep-02 |
Oct-02 |
Nov-02 |
Dec-02 |
Jan-03 |
PRICES ($/MMBtu) |
|
|
|
|
|
|
Average
Wellhead Price |
2.70 |
2.90 |
3.18 |
3.47 |
3.50 |
3.76 |
Residential Price |
9.40 |
9.49 |
8.43 |
7.81 |
7.67 |
7.76 |
Electric
Utilities Price |
3.26 |
3.29 |
3.45 |
3.99 |
4.22 |
4.46 |
|
|
|
|
|
|
|
SUPPLY (Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry
Gas Production |
1.59 |
1.54 |
1.60 |
1.57 |
1.62 |
1.68 |
Net Imports |
0.29 |
0.27 |
0.29 |
0.28 |
0.30 |
0.30 |
Imports |
0.34 |
0.32 |
0.34 |
0.33 |
0.34 |
0.35 |
Exports |
0.05 |
0.05 |
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 |
1.894 |
1.820 |
1.894 |
1.860 |
1.919 |
1.992 |
|
|
|
|
|
|
|
Working Gas
in Storage |
|
|
|
|
|
|
Opening |
2.558 |
2.792 |
3.059 |
3.149 |
3.000 |
2.523 |
Closing |
2.792 |
3.059 |
3.149 |
3.000 |
2.523 |
1.881 |
Net
Storage Withdrawal |
-0.234 |
-0.267 |
-0.090 |
0.149 |
0.478 |
0.641 |
|
|
|
|
|
|
|
Total
Supply |
1.660 |
1.553 |
1.804 |
2.009 |
2.397 |
2.633 |
|
|
|
|
|
|
|
Balancing
Item |
-0.049 |
-0.026 |
-0.199 |
-0.150 |
-0.069 |
0.034 |
|
|
|
|
|
|
|
Total
Primary Supply |
1.611 |
1.527 |
1.605 |
1.859 |
2.327 |
2.667 |
|
|
|
|
|
|
|
DEMAND (Trillion Cubic Feet) |
|
|
|
|
|
|
Lease
& Plant Fuel |
0.098 |
0.097 |
0.101 |
0.100 |
0.103 |
0.104 |
Pipeline
Use |
0.043 |
0.039 |
0.043 |
0.051 |
0.066 |
0.075 |
Delivered
to Consumers |
1.471 |
1.391 |
1.462 |
1.708 |
2.159 |
2.488 |
Residential |
0.129 |
0.146 |
0.255 |
0.457 |
0.733 |
0.939 |
Commercial |
0.151 |
0.150 |
0.194 |
0.273 |
0.386 |
0.469 |
Industrial |
0.844 |
0.825 |
0.816 |
0.827 |
0.902 |
0.947 |
Elec
Utility |
0.346 |
0.270 |
0.196 |
0.151 |
0.138 |
0.132 |
Total
Demand |
1.611 |
1.527 |
1.605 |
1.859 |
2.327 |
2.667 |
Source: Energy Information Administration, Short-Term Energy Outlook,
November 2002.