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Natural Gas Weekly Update Archive

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)











Henry Hub






New York












Cal. Comp. Avg,*






Futures ($/MMBtu)






Jan delivery






Feb delivery






*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).



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






West Region






Producing Region






Total Lower 48






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.


Other Market Trends:

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.



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.



Natural Gas Summary from the Short-Term Energy Outlook