for week ending December 18, 2002 | Release date: December 19, 2002 | Previous weeks
Natural gas spot prices on
Wednesday, December 18, were higher than the previous Wednesday at most locations
in the Lower 48 States, climbing between 20 and 60 cents per MMBtu. For the week (Wednesday-Wednesday), prices
at the Henry Hub increased 36 cents or roughly 8 percent to $4.86 per MMBtu. The price of the NYMEX futures contract for
January delivery at the Henry Hub has increased nearly 57 cents since last
Wednesday to settle at $5.278 per MMBtu yesterday (December 18). Natural gas in storage decreased to 2,635
Bcf, which is below the 5-year average by over 5 percent, but well within the
5-year historical range. The spot price
for West Texas Intermediate (WTI) crude oil increased $2.95 per barrel or about
11 percent since last Wednesday to trade at $30.44 per barrel or $5.248 per
MMBtu.
Spot prices generally were
higher yesterday than mid last week, keyed by significant price increases,
following a larger than expected drawdown report released last Thursday, December 12, and a return to colder
temperatures over the weekend. Another
factor that likely contributed to the run-up in natural gas prices late last
week was the spike in crude oil prices as WTI crude oil surged $2.70 per barrel
to average $30.10 per barrel on Monday, December 16. However, the natural gas price rally faltered on Tuesday,
December 17, and moderating temperatures on Wednesday, December 18, contributed
to price declines of 20 to 99 cents per MMBtu since Monday. The steepest Wednesday-to-Wednesday
increases principally occurred at selected points in the Midwest, Midcontinent,
and Louisiana regions. The smallest price increases occurred principally in the
Northeast region, where week-to-week price differences were generally less than
20 cents per MMBtu. Nevertheless,
prices in the Northeast region were among the highest in the nation, exceeding
$5 per MMBtu at most market locations. In contrast to the overall pattern of rising prices throughout most of
the country, prices fell up to 38 cents per MMBtu at many locations in the Rocky Mountain region as abundant supplies
and light weather demand in the region contributed to declines in prices.
At the
NYMEX, the price of the futures contract for January delivery at the Henry Hub
increased nearly 57 cents since Wednesday, December 11, to settle at $5.278 per
MMBtu on Wednesday, December 18. Prices
of the futures contracts for delivery through the heating season increased by
roughly 41 to 57 cents per MMBtu since December 11, with the larger increases
for the more immediate months' contracts. On Monday, December 16, the January 2003 futures contract climbed to
$5.341 per MMBtu, an all-time high for the contract. In addition, this is the highest that the futures price for next
month delivery has been since April 2001 when it reached $5.516 per MMBtu.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
12-Dec |
13-Dec |
16-Dec |
17-Dec |
18-Dec |
|
Henry Hub |
4.82 |
5.04 |
5.31 |
5.14 |
4.98 |
New York |
5.43 |
5.63 |
6.46 |
6.12 |
5.56 |
Chicago |
4.59 |
4.75 |
5.03 |
4.79 |
4.72 |
Cal. Comp. Avg,* |
4.40 |
4.52 |
4.83 |
4.70 |
4.61 |
Futures ($/MMBtu) |
|
|
|
|
|
Jan delivery |
5.089 |
5.284 |
5.341 |
5.240 |
5.278 |
Feb delivery |
5.020 |
5.235 |
5.297 |
5.179 |
5.249 |
*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 2,635 Bcf for the week
ended Friday, December 13, 2002, according to the EIA Weekly Natural Gas
Storage Report. This is more than 5
percent below the 5-year average for the report week, and almost 18 percent
below the level last year for the same week. (See Storage Figure) However, inventories were over 23
percent above the level reported 2 years ago at this time. The implied net change in working gas
inventories from last week was a net withdrawal of 159 Bcf, which is roughly 76
percent higher than the 5-year average of 90 Bcf for the report week. This is the second week in a row in which
net withdrawals were greater than 150 Bcf and above the 5-year average. Cold temperatures that prevailed in most
regions of the country likely drove the relatively large withdrawals from
storage. According to the National
Weather Service, gas-weighted heating degree-days were nearly 4 percent and 8
percent above normal and over 20 percent and 41 percent greater than last year
for the same report week in the New England and Middle Atlantic Census Regions,
respectively. Similarly, heating degree
days were more than 11 percent above normal in the South Atlantic and East South
Central regions, exceeding the level last year at this time by more than 80
percent. (See Temperature Map) (See Deviation Map)
All Volumes
in Bcf |
Current
Stocks 12/13/02 |
Estimated
Prior 5-Year (1997-2001) Average |
Percent Difference
from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 12/6/02 |
|
East Region |
1,537 |
1,702 |
-9.7% |
-103 |
1,640 |
|
West Region |
388 |
337 |
15.1% |
-15 |
403 |
|
Producing
Region |
710 |
747 |
-5.0% |
-41 |
751 |
|
Total Lower
48 |
2,635 |
2,786 |
-5.4% |
-159 |
2,794 |
|
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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FERC Approves Two LNG
Projects, Eliminates Open Access Rules for LNG Facilities: In
granting preliminary and final approval to two proposed LNG projects on Wednesday,
December 18, FERC announced that henceforth LNG terminals-both existing and proposed-would no longer be subject to open access regulations. Previously, LNG facilities were required to
submit an open access tariff for terminal services, and to charge cost-based
rates approved by FERC. The change in
policy means that LNG facilities will be treated essentially the same as
natural gas production facilities, over which FERC has no jurisdiction. On the other hand, FERC will retain
jurisdiction over the siting of LNG terminals. The Commission's two approvals were: (1) preliminary approval to Dynegy Midstream Services to convert its
existing liquefied petroleum gas terminal in Hackberry, LA, to an LNG import
terminal, with an initial receipt capacity of 750 million cubic feet per day;
and (2) final approval to CMS Trunkline to expand its Lake Charles, LA, LNG
terminal. The Hackberry LNG terminal,
if it gains final approval, would be the first LNG terminal approved for
construction in the United States in 25 years. Plans for expansion of the Lake Charles terminal-already the largest in North America-include construction of a second unloading dock for LNG tankers, a
fourth storage tank that would increase the facility's storage capacity by
nearly 50 percent to 9 Bcf, and a near-doubling of its gas deliverability to
1.2 Bcf per day.
Summary:
Natural gas prices generally
increased during the past week (Wednesday-Wednesday) with gains of over 20
cents at most market locations. The
futures contract price for January delivery increased by 57 cents, settling at
$5.278 per MMBtu. As of December 13,
working gas storage stocks were 2,635 Bcf, nearly 6 percent below the level recorded for the same week last
year but over 5 percent above the level recorded 2 years ago.