for week ending November 20, 2002 | Release date: November 21, 2002 | Previous weeks
Both spot and futures prices
recorded significant gains over the past week (Wednesday, November 13 to
Wednesday, November 20), as temperatures in many regions of the country headed
below normal and the National Weather Service (NWS) predicted more of the same
through the end of the month for at least the eastern two-thirds of the
nation. Most of the gains came in large
one-day price increases on Monday. At
the Henry Hub, the average spot price increased 5 days in a row, and ended
trading yesterday (November 20) at $4.27 per MMBtu, 44 cents higher than last
Wednesday, 27 cents of which was gained on Monday. The NYMEX futures contract for December delivery at the Henry Hub
ended trading yesterday at $4.254 per MMBtu, up $0.377 for the week. Nearly 75 percent of this increase ($0.282)
came in Monday's trading. Natural gas
in storage as of Friday, November 15 decreased by 1 Bcf to 3,096 Bcf, which
exceeds the 5-year average by 3.3 percent. The spot price of West Texas Intermediate (WTI) crude oil, after
reaching a 5-month low last Wednesday, at $25.28 per barrel ($4.36 per MMBtu),
increased $1.72, settling at $27.00 per barrel, ($4.66 per MMBtu) in trading
yesterday (Wednesday, November 20).
Natural gas prices moved up at virtually all market
locations this past week (Wednesday-Wednesday). Spot prices shot upward on
Monday, November 18. Gains were seen at
all market locations tracked by Intelligence Press, Inc. with increases
ranging from a dime to nearly 40 cents per MMBtu at the majority of pricing
points. Colder-than-normal temperatures
beginning Friday or Saturday in all regions of the nation except the West
spurred gas demand for space heating to begin the week. This, coupled with the normal resumption of
workweek industrial demand, put upward pressure on spot prices. Continued cold weather, particularly in the
Midwest, Northeast, and Southeast, kept prices on an upward track through
Wednesday, although gains were much smaller on succeeding days. By Wednesday, November 20, cumulative price
increases for the week were generally uniform at 38-40 cents for nearly all
market areas. Spot prices at Chicago
and New York citygates reached $4.26 and $4.61 per MMBtu, respectively-the highest spot prices seen at these
locations since the end of last month. Price increases in the Rockies were slightly less, at an average of 33
cents per MMBtu, bringing prices at locations there back above $3 per MMBtu.
Settlement prices on the futures market increased
only two days out of five. In trading
on Friday, November 15, the near-month contract (December delivery) rose $0.112
per MMBtu, to settle at $3.981. This
increase likely reflected the NWS's updated 6-10 day temperature forecast of
Friday, containing the first signs of significantly cold weather in the
offing. However, the updated forecast
issued on Sunday, November 17, for the first time this heating season showed
projected below normal temperatures for the entire eastern two-thirds of the
nation. The December contract jumped
$0.282 per MMBtu on Monday to settle at $4.263, its highest settlement price
since its first day as the near-month contract on October 30, when it reached
$4.389 per MMBtu. Price increases for
the other heating-season delivery months ranged from 19 to over 26 cents per
MMBtu. Since then, futures prices have
been mostly flat to just slightly down, as the December contract settled
yesterday at $4.254 per MMBtu. The NWS
is scheduled to release updated 30- and 90-day forecasts today (Thursday,
November 21), which could have important implications for futures prices.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
14-Nov |
15-Nov |
18-Nov |
19-Nov |
20-Nov |
|
Henry Hub |
3.90 |
3.91 |
4.18 |
4.25 |
4.27 |
New York |
4.25 |
4.30 |
4.60 |
4.56 |
4.61 |
Chicago |
3.96 |
3.92 |
4.20 |
4.25 |
4.26 |
Cal. Comp. Avg,* |
3.74 |
3.63 |
3.87 |
3.93 |
3.92 |
Futures ($/MMBtu) |
|
|
|
|
|
Dec delivery |
3.869 |
3.981 |
4.263 |
4.261 |
4.254 |
Jan delivery |
3.984 |
4.093 |
4.356 |
4.352 |
4.352 |
*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 for the week ended Friday,
November 15 was 3,096 Bcf, according to EIA's Weekly Natural Gas Storage
Report, which is 3.3 percent above the 5-year (1997-2001) average (See
Storage Figure). This
is just 1 Bcf down from the level of the previous week. Storage activity for
the report week differs markedly from that of the two prior weeks, which saw
implied total net withdrawals of 27 and 48 Bcf, and implied net withdrawals in
all regions. At least two factors
likely helped to limit gas demand during the report week, easing pressure on
inventories. One was the Veteran's Day
holiday (Monday, November 11), keeping some industrial demand off-line for an
extra weekend day. The other, perhaps
more important, was the unusually warm weather experienced in most regions of
the country that week. (See Temperature Map)
(See Deviation Map) According to the NWS's most recent
gas-customer weighted heating degree-day (HDD) data, HDDs averaged below
normal—and thus temperatures averaged above normal—for the week in all but one
of the nine Census divisions of the lower 48 states. HDDs for the week were 16 percent below normal for the Middle
Atlantic, 25 percent below normal for New England, and 40 percent below normal
for the Pacific. For the nation as a
whole, HDDs were 12 percent below normal.
All Volumes
in Bcf |
Current
Stocks 11/15/02 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 11/08/02 |
|
East Region |
1,840 |
1,839 |
0.1% |
5 |
1,835 |
|
West Region |
413 |
360 |
14.7% |
3 |
410 |
|
Producing
Region |
843 |
798 |
5.6% |
-9 |
852 |
|
Total Lower
48 |
3,096 |
2,998 |
3.3% |
-1 |
3,097 |
|
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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EIA Releases Annual
Energy Outlook 2003, With Gas Projections Through 2025: On Wednesday, November 20, EIA
released the reference case from its soon-to-be published Annual Energy
Outlook 2003, projecting a growth of 54 percent in gas demand by the year
2025. Growing at an average annual rate
of 1.8 percent, total consumption is projected to increase from 22.7 Tcf in
2001 to 34.9 Tcf in 2025, with most of the increase going to supply expanding
gas-fired electricity generation. EIA
foresees the need for major new domestic supply projects, such as from
deepwater offshore wells and an Alaskan pipeline, and increased imported
supplies, including new and expanded LNG facilities and the Mackenzie Delta
Pipeline in Canada, in order to be able to meet the growth in demand. Total natural gas imports are projected to
satisfy 22 percent of total U.S. demand in 2025, up from 16 percent in
2001. EIA also predicts higher prices
by 2025, as increased demand will outstrip the ability of technology
improvements and new supply sources to offset resource depletion. EIA projects that the average wellhead price
will be about $3.90 per Mcf, or about $3.80 per MMBtu, in 2025, which is
equivalent to more than $7 per Mcf ($6.83 per MMBtu) in nominal dollars.
MMS Announces New World
Records For Deepwater Pipelines And Production: New production from the Camden Hills field about 150 miles southeast
of New Orleans has set a world water-depth record, according to the Minerals
Management Service (MMS). The MMS announced on November 18 that Marathon Oil Company set the world record with production from the Camden Hills field at a water depth of 7,209 feet,
which exceeds by about 100 feet the previous record set in the nearby Aconcagua
field. Marathon Oil Company, which discovered the Camden Hills field in 1999,
is the operator of the production facilities. The MMS stated that production is
currently 100 million cubic feet per day. TotalFinaElf has also set a world
record in the vicinity for laying a pipeline to the production site at the same
water-depth. The pipeline is part of the Canyon Express gas gathering system,
which is a collaboration among several operators that connects the Camden
Hills, Aconcagua, and Kings Peak natural gas fields. MMS said that peak flow on
the Canyon Express line will be 500 million cubic feet per day.
Summary:
Spot and futures prices recorded significant gains
as colder-than-normal temperatures prevailed in many important gas-consuming
areas, and were forecast to continue at least through the end of the
month. Unusually warm temperatures
during the week ended Friday, November 15 suppressed storage withdrawals,
leaving inventories nearly unchanged from the previous week.
Natural Gas Summary from the Short-Term
Energy Outlook