for week ending December 4, 2002 | Release date: December 5, 2002 | Previous weeks
Cold weather over the
Thanksgiving weekend and early this week lifted natural gas spot prices in many
regions of the country. While prices at several Northeast trading locations
climbed more than $1 per MMBtu since Wednesday, November 27, prices along the
Gulf Coast and other producing areas increased by a more modest 4 to 25 cents
per MMBtu. On the week (Wednesday-Wednesday), the Henry Hub spot price rose
$0.04 per MMBtu to $4.24. At the NYMEX, the price of the futures contract for
January delivery climbed just under a dime to $4.298 per MMBtu. Cold weather
throughout the final full week in November also resulted in the season's
largest withdrawal from storage. Natural gas in storage as of Friday, November
29, decreased by 91 Bcf to 2,956 Bcf, which exceeds the 5-year average by 0.9
percent. The spot price of West Texas
Intermediate (WTI) crude oil dropped $0.54 per barrel in trading yesterday
(Wednesday, December 4), settling at $26.80, or $4.62 per MMBtu.
After a Thanksgiving week with no trading on
Thursday or Friday, cash markets this week adjusted quickly to new short-term
forecasts of cold weather across much of the country, including key
gas-consuming areas in the Northeast. The Henry Hub spot price reversed ground
after price declines last week, gaining 16 cents per MMBtu to an average of
$4.35 by Tuesday, only to drop back to $4.23 again yesterday (Wednesday,
December 4). Price gains in the Northeast have been considerably larger with
demand for space heating on Monday driving prices at the New York citygate up
$1.19 per MMBtu, or 24 percent, to $6.34. The New York citygate price is still
nearly $1 per MMBtu more than last week, although it dropped 43 cents to an
average of $5.91 yesterday. A compressor outage on Algonquin Gas Transmission
and restrictions on Tennessee Gas Pipeline in the Northeast likely contributed
to prices rising well above $7 on the pipelines in trading yesterday. The
Tennessee Zone 6 spot price averaged $7.62 per MMBtu, an increase of $2.81 on
the week. In contrast to the price variability in the East, prices in
California and other western states were flat or up by no more than 16 cents on
the week.
Settlement prices on the futures
market reversed late November's downward trend to record gains of about a dime
on the week. The futures contract for January delivery at the Henry Hub
yesterday closed at $4.298 per MMBtu, up slightly more than 7 cents on the day.
The contract hit a closing high of $4.32 per MMBtu for the week on Monday, then
dropped 9.4 cents on Tuesday amid selling pressure with longer-term weather
forecasts reflecting a possible warming trend for later in December. The
possibility of another El Nino phenomenon this winter, which would increase the
likelihood of a warmer-than-normal January and February, continues to temper
futures prices. The 12-month strip, or the average price of the futures contracts
for each month in 2003, on Wednesday closed at $4.077, up 4.2 cents.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
28-Nov |
29-Nov |
2-Dec |
3-Dec |
4-Dec |
|
Henry Hub |
holiday |
holiday |
4.23 |
4.35 |
4.23 |
New York |
holiday |
holiday |
6.14 |
6.34 |
5.91 |
Chicago |
holiday |
holiday |
4.17 |
4.28 |
4.20 |
Cal. Comp. Avg,* |
holiday |
holiday |
4.01 |
4.09 |
4.01 |
Futures ($/MMBtu) |
|
|
|
|
|
Jan delivery |
holiday |
holiday |
4.320 |
4.226 |
4.298 |
Feb delivery |
holiday |
holiday |
4.259 |
4.175 |
4.243 |
*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 2,956 Bcf or 0.9 percent
above the 5-year average for the week ending November 29, according to EIA's Weekly
Natural Gas Storage Report(See Storage Figure). The implied net withdrawal was 91 Bcf, the
highest withdrawal for the week since 1996. The decline in inventories compares
with an average net withdrawal of 17 Bcf for comparable weeks during the past 5
years and a 4 Bcf injection last year. Across the country, the weather for the
week ended November 30 was about 9 percent colder than normal as measured by
the National Weather Service's (NWS) most recent gas-customer weighted heating
degree-day (HDD) report (See Temperature Map)
(See Deviation Map)
In the heavily populated New England and Middle Atlantic Census regions, HDDs
were 17%
higher than normal. HDDs for the month of November totaled 596, or 2 percent
more than normal. Although this season's inventories have dropped 298 Bcf below
last year's mark for this week, inventories currently remain more than 500 Bcf
above the less than 2,500 Bcf in storage at this time in 2000.
All Volumes
in Bcf |
Current
Stocks 11/29/02 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 11/22/02 |
|
East Region |
1,751 |
1,791 |
-2.2% |
-58 |
1,809 |
|
West Region |
411 |
356 |
15.4% |
-4 |
415 |
|
Producing
Region |
794 |
783 |
1.4% |
-29 |
823 |
|
Total Lower
48 |
2,956 |
2,931 |
0.9% |
-91 |
3,047 |
|
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. |
||||||
Natural Gas Rig Counts: The number of rigs drilling
for natural gas climbed by 16 to 708 for the week ending November 27, according
to Baker-Hughes Incorporated. This is the third highest rig count recorded for
the report week in the 15 years that Baker-Hughes has reported rigs separately
by gas or oil drilling. Natural gas
rigs are roughly 10 percent below last year at this time, however that is when
they numbered a near-record high of 785 for the report week. Natural gas rigs are almost 3 percent above
the 5-year (1997-2001) average for the report week, and nearly 1 percent over
the average number of rigs so far in 2002. The share of rigs drilling for natural gas has been consistently above
80 percent since early last year. Since
the week ended May 17, 2002, rigs drilling for natural gas have comprised
roughly 84 percent of total rigs drilling, which is close to a record for the
split between gas and oil rigs. Rigs
drilling for natural gas last week constituted 83.2 percent of rigs drilling in
the United States, which is the highest share of rigs drilling for natural gas
for the report week in 15 years. The emphasis on gas prospects undoubtedly
reflects a relative advantage in the economics of natural gas prospects
compared with domestic crude oil prospects.
Summary:
Reflecting higher aggregate demand across the
country, prices in the producing regions increased generally less than a $0.25
per MMBtu on the week. Continued cold weather in the Northeast this week
lifted prices in the region by more than $1.00 per MMBtu since last Wednesday. Storage
withdrawals continued at a rapid pace for this time of year, with the industry
pulling 91 Bcf for the week ending November 29. At 2,956 Bcf, however,
inventories remain slightly above the 5-year average.
Natural Gas Summary from the
Short-Term Energy Outlook