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Natural Gas Summary from the Short-Term Energy Outlook
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Natural Gas Summary from the Short-Term Energy Outlook

   

 

 

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 winterís 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.

 

 

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