for week ending December 11, 2002 | Release date: December 12, 2002 | Previous weeks
Spot prices generally moved
higher for the week (Wednesday, December 4 to Wednesday, December 11) with
exceptions at several Northeast locations, while futures prices experienced
robust gains, particularly for contracts for delivery through the end of the
heating season. Unusually cold
temperatures accompanied the heating seasons first significant and widespread
snow storm late last week, and temperatures plunged again ahead of the ice
storm of Tuesday and Wednesday. At the
Henry Hub, the average spot price gained 41 cents for the week, ending trading
yesterday (Wednesday, December 11) at $4.64 per MMBtu. Since last Wednesday, the NYMEX futures
contract for delivery in January 2003 gained $0.411 per MMBtu, settling
yesterday at $4.709. Natural gas in
storage as of Friday, December 6, decreased to 2,794 Bcf, which is 2.9 percent
below the 5-year average. The price of
West Texas Intermediate crude oil gained 69 cents per barrel for the week,
ending trading yesterday at $27.49 per barrel, or $4.74 per MMBtu.
Accelerating price increases over the past two days
(Tuesday and Wednesday, December 10-11) pushed average spot prices up for the
week (Wednesday to Wednesday) by 10 to as much as 40 cents per MMBtu at most
market locations. Yesterdays increases
ranged from 12 to 29 cents per MMBtu, as the market reacted in part to a
damaging ice storm that engulfed much of the East Coast, mirroring at a
magnified level last Thursdays upward surge of up to 19 cents per MMBtu when
the first significant storm of the heating season brought heavy snowfall and
very cold temperatures from the northern plains across the Midwest and into New
England and the Mid-Atlantic. The sharp
increase of over 25 cents in the near-month and February 2003 futures contracts
on Tuesday at the NYMEX presaged the increased upward momentum. The major exception to the weekly pattern
occurred at a number of Northeast market locations, where spot prices were
settling down from their unusually high levels of last week, driven in part by
transportation restrictions on New York deliveries on the Algonquin system. While Northeast spot prices did participate
in yesterdays runup, they were down for the week at most locations. Price decreases ranged from a 17-cent
decline, to $5.31 per MMBtu, on TRANSCO for non-New York delivery to a $2.40 drop
on Tennessee Zone 6, to $5.22 per MMBtu. As of yesterday, citygate prices for New York and Chicago averaged $5.39
and $4.43 per MMBtu, respectively.
On the NYMEX, settlement prices
for contracts through the end of the current heating season soared upward
around 40 cents per MMBtu for the week, with a major surge in Tuesdays
(December 10) trading, during which the near-month (January 2003 delivery)
contract gained $0.277 per MMBtu to settle at $4.636. The February and March contracts also rose sharply, by over 26
and nearly 23 cents per MMBtu, respectively, as a noted private weather
forecasting team released a report that called for a return to
colder-than-normal weather at the end of December after a brief short-term
warming trend. Futures prices also had
strong gains last Thursday, in response to the EIAs storage report showing an
implied net withdrawal of 91 Bcf that increased the deficit with respect to
last years levels to 298 Bcf. In
yesterdays trading, the January contract added another $0.073 per MMBtu, to
settle at $4.709-the highest settlement price for a near-month contract
since April 27, 2001, when the June 2001 contract initiated its near-month
position at $4.867 per MMBtu.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
5-Dec |
6-Dec |
9-Dec |
10-Dec |
11-Dec |
|
Henry Hub |
4.35 |
4.39 |
4.32 |
4.39 |
4.64 |
New York |
6.16 |
5.92 |
5.49 |
5.23 |
5.39 |
Chicago |
4.31 |
4.30 |
4.19 |
4.26 |
4.43 |
Cal. Comp. Avg,* |
4.09 |
4.09 |
4.09 |
4.13 |
4.33 |
Futures ($/MMBtu) |
|
|
|
|
|
Jan delivery |
4.406 |
4.38 |
4.359 |
4.636 |
4.709 |
Feb delivery |
4.359 |
4.35 |
4.332 |
4.594 |
4.675 |
*Avg. of NGI's reported
avg. prices for: Malin, PG&E
citygate, |
|||||
and Southern California
Border Avg. |
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Source: NGI's Daily Gas
Price Index (http://intelligencepress.com). |
Storage:
Working gas in storage was 2,794 Bcf for the week
ended December 6, according to EIAs Weekly
Natural Gas Storage Report. This
is nearly 3 percent below the previous 5-year average, and is the first time
since the middle of June 2001 that weekly inventories have fallen below the
previous 5-year average (See Storage Figure). The implied net withdrawal of 162 Bcf
is the largest for this week over the 9-year span of EIA weekly data, exceeding
the previous record for this week, set during the extremely cold December of
2000, by 15 Bcf. The implied net
withdrawals in both the East Consuming and Producing regions were also record
setters. This storage activity occurred
during a week marked by significantly colder-than-normal temperatures
throughout much of the nation from the Rockies eastward, with date-specific low
temperature records being set at numerous locations in the northern plains
through the lower Great Lakes to the mid-Atlantic (See
Temperature Map) (See Deviation Map) Gas-customer-weighted heating degree-days
(HDD) for the week ranged from 18 to nearly 40 percent greater than normal for
such high gas-consuming areas as the New England, Middle Atlantic, and East and
West North Central Census divisions. Compared with this week last year, HDDs were anywhere from 43 to 93
percent higher in seven of the nine Census divisions, and were 55 percent
higher for the United States as a whole.
All Volumes
in Bcf |
Current
Stocks 12/6/02 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 11/29/02 |
|
East Region |
1,640 |
1,755 |
-6.6% |
-111 |
1,751 |
|
West Region |
403 |
349 |
15.5% |
-8 |
411 |
|
Producing
Region |
751 |
772 |
-2.7% |
-43 |
794 |
|
Total Lower
48 |
2,794 |
2,876 |
-2.9% |
-162 |
2,956 |
|
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 Announces Holiday Release Schedule Through 2003: EIA disseminates weekly natural gas storage information in the Weekly Natural Gas Storage Report (WNGSR). Working gas volumes are reported at a
national level and for three regions: Consuming East, Consuming West, and
Producing. The standard release time
and day of the week for the WNGSR is
between 10:30 a.m. and 10:40 a.m., Eastern Time (ET), on Thursdays, except for
certain weeks with Federal holidays. A new
release schedule for weeks through calendar
year 2003 is available from the WNGSR web page. During the weeks with the upcoming Christmas
and New Years holidays, the WNGSR will be released between 10:30 a.m.
and 10:40 a.m. (ET) on Friday.
U.S. Energy Firm Applies for
License to Develop LNG Terminal in Gulf of Mexico: Chevron Texaco has submitted an application to the Department of
Transportation, U. S. Coast Guard, to construct and operate a liquefied natural
gas (LNG) terminal in the U.S. Gulf of Mexico. Named Port Pelican, the planned
deepwater port will be located 60 miles off the Louisiana coast and if approved
will be the first LNG import terminal constructed in the United States in over
20 years. As now envisioned, Port Pelican would be developed in two phases with
the first offshore facility designed to process close to 800 million cubic feet
of gas per day. The initial phase is expected to be completed and operational
in 2006 with a second phase of equal size to follow.
Natural Gas Summary from the Short-Term
Energy Outlook:
EIA projects that natural
gas wellhead prices will average $3.67 per MMBtu through December 2002 and then
increase to more than $4.00 in January and February (Short-Term
Energy Outlook, released December 9, 2002). Wellhead prices for the overall heating
season (November through March), assuming normal weather, are expected to
average about $3.90 per MMBtu, or $1.54 more than last winter's levels, while
prices to residential customers are expected to average $8.15 per MMBtu
compared with $7.14 last winter. Natural gas prices were higher than expected
in November as below-normal temperatures throughout much of the nation
increased heating demand, placing upward pressure on gas prices. Spot prices at
the Henry Hub climbed above $4.00 per MMBtu in the last half of November after
ranging between $3.80 and $3.90 per MMBtu during the first half of the month.
Overall in 2002, wellhead prices are expected to average $2.96 per MMBtu
compared with $4.00 in 2001. In 2003, average wellhead prices are projected to
increase $0.63 per MMBtu to $3.59, owing to expectations of higher demand
levels than in 2002 and lower storage levels for most of the year compared with
2002 levels.
Domestic dry natural gas
production is projected to fall by about 1.6 percent in 2002, compared with the
2001 growth rate of 2.4 percent. Lower demand and lower natural gas prices have
reduced production and resource development incentives from their highs of last
year. Nevertheless, current supplies appear to be at adequate levels. As of
December 6, 2002, working gas stocks were 2,794 Bcf, only 2.9 percent less than
the 5-year average, despite strong electricity-related demand increases during
the second half of the year and hurricane-related outages, as well as the
abnormally cold start to the heating season thus far. Furthermore, natural
gas-directed drilling, while down sharply from 2001 levels, is still quite
strong from a longer historical perspective. The number of gas-directed rigs
climbed by 10 to 705 for the week ending December 6, 2002, according to
Baker-Hughes Incorporated. This is the third highest gas rig count reported for
the week in the 15 years that Baker Hughes has reported rigs separately by gas
or oil drilling. In 2003, production is expected to rebound by about 2.7
percent as demand rises and inventories fall back closer to normal.
Total natural gas demand for
the first half of 2002 fell by 750 Bcf, a decline of 6.5 percent from 2001
levels, although much of the decline was due to weather effects in the
residential and commercial sectors. In contrast, natural gas demand in the
combined residential and commercial sectors during the second half of 2002 is
expected to be 14.4 percent higher than 2001 levels. Overall in 2002, however,
natural gas demand is expected to decline by 0.9 percent from the 2001 level,
owing to overall weakness in the industrial sector. Solid growth in natural gas
demand of 4.0 percent seems likely in 2003, especially if industrial sector
consumption expands significantly as expected. For this Outlook, natural gas demand reflects data revisions employed to be
consistent with definitions and aggregates used in the 2001 edition of EIA's Annual Energy Review (see "Data
Notes" Short-Term Energy Outlook, December 2002). Historical
demand data were revised upward by about 1 Tcf per year to adjust for likely
undercounting of deliveries to power generating facilities (other than electric
utilities) in the data collection system used to report supply and demand in
EIA's Natural Gas Monthly and Natural Gas Annual. The revisions did
not qualitatively change the pattern of annual demand shifts reported in
earlier Outlooks.
Short-Term Natural Gas Market
Outlook, December 2002
|
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|
History |
Projections |
||||
|
Sep-02 |
Oct-02 |
Nov-02 |
Dec-02 |
Jan-03 |
Feb-03 |
PRICES ($/MMBtu) |
|
|
|
|
|
|
Average
Wellhead Price |
2.90 |
3.26 |
3.64 |
3.67 |
4.07 |
4.19 |
Residential
Price |
9.54 |
8.23 |
7.90 |
7.97 |
8.14 |
8.31 |
Electric
Utilities Price |
3.33 |
3.57 |
4.19 |
4.41 |
4.81 |
5.01 |
|
|
|
|
|
|
|
SUPPLY (Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry
Gas Production |
1.49 |
1.54 |
1.52 |
1.58 |
1.69 |
1.52 |
Net
Imports |
0.28 |
0.29 |
0.28 |
0.31 |
0.32 |
0.28 |
Imports |
0.33 |
0.34 |
0.32 |
0.35 |
0.36 |
0.32 |
Exports |
0.05 |
0.04 |
0.04 |
0.04 |
0.04 |
0.04 |
Suppl.
Gaseous Fuels |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
Total New
Supply |
1.772 |
1.835 |
1.806 |
1.898 |
2.018 |
1.806 |
|
|
|
|
|
|
|
Working
Gas in Storage |
|
|
|
|
|
|
Opening |
2.773 |
3.057 |
3.149 |
2.945 |
2.457 |
1.809 |
Closing |
3.057 |
3.149 |
2.945 |
2.457 |
1.809 |
1.416 |
Net
Storage Withdrawal |
-0.283 |
-0.092 |
0.204 |
0.488 |
0.648 |
0.393 |
|
|
|
|
|
|
|
Total
Supply |
1.489 |
1.742 |
2.010 |
2.386 |
2.666 |
2.199 |
|
|
|
|
|
|
|
Balancing
Item |
0.082 |
-0.078 |
-0.062 |
0.015 |
0.005 |
0.175 |
|
|
|
|
|
|
|
Total
Primary Supply |
1.571 |
1.664 |
1.948 |
2.401 |
2.672 |
2.374 |
|
|
|
|
|
|
|
DEMAND (Trillion Cubic Feet) |
|
|
|
|
|
|
Lease
& Plant Fuel |
0.090 |
0.093 |
0.092 |
0.097 |
0.100 |
0.090 |
Pipeline
Use |
0.040 |
0.044 |
0.053 |
0.067 |
0.075 |
0.066 |
Delivered
to Consumers |
1.442 |
1.527 |
1.803 |
2.238 |
2.496 |
2.217 |
Residential |
0.141 |
0.254 |
0.476 |
0.740 |
0.938 |
0.808 |
Commercial |
0.149 |
0.196 |
0.283 |
0.388 |
0.469 |
0.423 |
Industrial |
0.904 |
0.890 |
0.898 |
0.968 |
0.965 |
0.882 |
Elec Utility |
0.249 |
0.186 |
0.146 |
0.141 |
0.124 |
0.105 |
Total
Demand |
1.571 |
1.664 |
1.948 |
2.401 |
2.672 |
2.374 |
Source: Energy Information Administration, Short-Term Energy Outlook,
December 2002.