for week ending January 22, 2003 | Release date: January 23, 2003 | Previous weeks
Spot
prices have surged upward since Wednesday, January 15, particularly in the
Northeast where prices increased by more than a dollar each of the past 3
days. At the Henry Hub, the average
spot price rose 46 cents during this holiday-shortened period, reaching $5.68
per MMBtu on Wednesday, January 22 as bitterly cold weather continued to
blanket the nation east of the Rocky Mountains. Futures prices also increased for the week. The settlement price of the NYMEX futures
contract for February delivery rose nearly a quarter, ending yesterday's
(January 22) trading at $5.673 per MMBtu. The effects of the continuing unusually cold temperatures also showed up
in storage activity during the week ended Friday, January 17, as implied net
injections were 210 Bcf, leaving storage inventories at 1,985 Bcf, which is 3.7
percent below the 5-year average. The
spot price for West Texas Intermediate (WTI) crude oil has increased $1.09 per
barrel since last Wednesday, ending trading yesterday at $34.32 or $5.92 per
MMBtu.
With the exception of Tuesday's (January 21) trading
session coming out of the 3-day Martin Luther King, Jr. holiday weekend, spot
prices rose robustly at most market locations with double-digit increases on
the other 3 trading days of the period. Spot prices were reacting to the intensely cold temperatures that
continued into a second week virtually throughout the nation east of the
Rockies, keeping demand very strong. In high gas-consuming areas of the Midwest, Northeast, and Central
regions, daily average high temperatures have been consistently below freezing
since last Wednesday. Daily average
temperatures during this period have been further below normal in the Northeast
than in any other region, by up to 17 degrees. The average price for Northeast
market locations increased $7.13 per MMBtu from Wednesday, January 15 to
Wednesday, January 22. The Midwest
showed the next largest average increase at $0.88 per MMBtu to an average of
$5.80. Elsewhere price increases were
not as large: the Henry Hub increased
46 cents to $5.68 per MMBtu; and the Southern California Border Average price
rose 40 cents, to $5.06 per MMBtu. As
of yesterday, average spot prices were generally in the $5-$6 range, except in
the Northeast, Florida, and the Rockies. While prices in the Northeast and Florida exceeded $6 per MMBtu, prices
at most locations in the Rockies were around $3.50 per MMBtu.
On the NYMEX, futures prices fluctuated in the past
week, although prices settled yesterday higher than last week. The market's two-day downward trend on
Friday and Tuesday seemed to have been influenced by longer-range weather
forecasts calling for moderating temperatures after the end of January. Price increases resumed yesterday, as a new
mass of polar air began streaming in from Canada to reinforce the current cold
snap. The settlement price of the
near-month contract (for February delivery) rose $0.243 per MMBtu since last
Wednesday to settle yesterday at $5.673. The contract for March delivery gained $0.253, settling yesterday at
$5.608 per MMBtu. Contracts for
delivery during the upcoming storage refill months (April-October) had gains
ranging from a little over 8 cents to nearly 17 cents per MMBtu. As of yesterday, the lowest-priced gas
during the refill season was for October delivery, at $4.895 per MMBtu.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
16-Jan |
17-Jan |
20-Jan |
21-Jan |
22-Jan |
|
Henry Hub |
5.51 |
5.68 |
Holiday |
5.47 |
5.68 |
New York |
7.97 |
9.55 |
Holiday |
13.63 |
19.05 |
Chicago |
5.52 |
5.70 |
Holiday |
5.56 |
5.90 |
Cal. Comp. Avg,* |
5.03 |
5.11 |
Holiday |
4.99 |
5.14 |
Futures ($/MMBtu) |
|
|
|
|
|
Feb delivery |
5.645 |
5.536 |
Holiday |
5.433 |
5.673 |
Mar delivery |
5.603 |
5.503 |
Holiday |
5.432 |
5.608 |
*Avg. of NGI's reported
avg. prices for: Malin, PG&E
citygate, |
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and Southern California
Border Avg. |
|||||
Source: NGI's Daily Gas
Price Index (http://intelligencepress.com). |
Working gas in storage was 1,985 Bcf for the week
ended January 17, according to EIA's Weekly
Natural Gas Storage Report, leaving inventories nearly 4 percent below
the previous 5-year (1998-2002) average for the week (See Storage Figure). Implied net withdrawals were 210 Bcf, or
about 38 percent greater than the previous 5-year average. The large net withdrawal reflects the frigid
temperatures that gripped most of the nation east of the Rocky Mountains during
that week (See Temperature Map) (See Deviation Map). In most regions, gas customer-weighted
heating degree days (HDD) exceeded normal, which results in an even stronger
difference from last year when temperatures were warmer than normal. HDD in the high-gas-consuming New England
and Middle Atlantic Census Divisions were 13 and 18 percent above normal,
respectively, but 39 and 50 percent greater than last year, according to the
latest data from the National Weather Service. HDD exceeded normal by the largest amounts in the East South Central (28
percent greater) and South Atlantic (24 percent greater) Census Divisions. Conversely, HDD in the Rockies and westward
averaged well below normal, easing demand and resulting in a storage draw from
West region storage facilities that was more than 6 percent below the 5-year
average.
All Volumes
in Bcf |
Current
Stocks 1/17/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 1/10/03 |
|
East Region |
1,111 |
1,233 |
-9.9% |
-137 |
1,248 |
|
West Region |
314 |
264 |
18.9% |
-15 |
329 |
|
Producing
Region |
560 |
564 |
-0.7% |
-58 |
618 |
|
Total Lower
48 |
1,985 |
2,061 |
-3.7% |
-210 |
2,195 |
|
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 Proposes Rapid Rebuild
Procedures for Deliberately Damaged Pipelines: The Federal Energy
Regulatory Commission (FERC) proposed a rule on Wednesday, January 15, that
would allow interstate natural gas pipelines to rebuild facilities quickly that
were deliberately damaged or destroyed. The Notice of Proposed Rulemaking (NOPR) would broaden pipelines'
construction activities under the Part 157 blanket certificate authority in the
case of intentional damage to: (1) waive the 45-day notification requirement
prior to the start of construction, and (2) remove cost limitations for the
types of projects authorized under the blanket certificate authority. Aimed primarily at situations in which a
pipeline mainline has suffered damage, the NOPR would also authorize a pipeline
to depart from an existing right-of-way, making it possible for the pipeline to
skirt a damaged site to reconnect with its mainline to restore service. The revised regulations address concerns
raised last April at a joint FERC-Department of Transportation meeting in which
pipeline executives noted that current FERC regulations could inhibit rapid
restoration of service in the case of sudden disruptions caused by deliberate
attacks or other unexpected emergencies. While the NOPR would facilitate service restoration, it still would
require that pipelines comply with existing environmental, safety, and land
acquisition rules.
Summary:
Unusually
cold temperatures that have persisted east of the Rockies for a second week
pushed spot gas prices significantly higher, with average prices at some
Northeast market locations approaching $20 per MMBtu. Future prices also increased, but more modestly. Implied net storage withdrawals of 210 Bcf
were the third largest for this week in the 9-year span of EIA data.
Natural
Gas Summary from the Short-Term Energy Outlook