for week ending February 5, 2003 | Release date: February 6, 2003 | Previous weeks
Natural gas spot prices climbed between $0.55 and
$0.95 per MMBtu at most production-area trading locations since Wednesday,
January 29. Strong space-heating demand in the Midcontinent and parts of New
England supported prices well over $6 throughout much of the country, but price
gains were particularly large at Rockies trading locations. On the week
(Wednesday-Wednesday), the Henry Hub spot price jumped $0.62 to an average of
$6.24 per MMBtu. The NYMEX futures contract for March delivery gained just
under 2 cents per MMBtu on the week to settle at $5.644 on Wednesday, February
5. Natural gas in storage as of Friday, January 31, decreased to 1,521 Bcf,
which is 15.9 percent below the 5-year (1998-2002) average. The spot price for
West Texas Intermediate (WTI) crude oil rose $0.37 per barrel on the week to
yesterday's closing price of $33.91 per barrel, or $5.29 per MMBtu.
With
storage inventories steadily declining and yet more cold weather across the
country so far this month, spot prices at most Gulf Coast and East Texas
trading locations jumped well above futures prices for March delivery. Although
market backwardation — when the spot price exceeds futures prices — is not
unusual for this time of year, spot prices in the production area suggest a
tight physical market as the Henry Hub spot price exceeded the price for March
delivery of natural gas by as much as 60 cents per MMBtu. Despite a slight
decrease of 2 cents per MMBtu yesterday (February 4), the Henry Hub spot price
gained about 11 percent since last Wednesday (January 29) to an average of
$6.24. Price gains in the Midcontinent and the Rockies were closer to $1 or
more per MMBtu as a cold front moved through the region, reaching as far south
as Oklahoma. The price for supplies on El Paso Corp.-owned ANR Pipeline in
Illinois jumped 86 cents per MMBtu to $6.04, in part owing to concerns over
transportation constraints following the rupture of a segment of the pipeline
on Sunday. No injuries have been reported in the incident, and El Paso states
that supplies have been successfully re-routed through other loops in the
pipeline. Markets in the Mid-Atlantic and New England still command the
highest prices in the nation, at an average of $7.37 yesterday, a gain of about
13 cents on the week.
At the NYMEX, futures
prices traded near two-year highs since last Wednesday (January 29) as declining
storage levels have increased supply concerns. The price for the March contract
in its first week of trading as the near-month contract gained slightly less
than 2 cents per MMBtu to a close of $5.644 per MMBtu. The March contract now
trades at nearly a 60-cent premium to the final settlement price of this
winter's January contract (usually the highest price contract of the season),
suggesting an increasingly tight market for natural gas. The 12-month strip, or
the average price for delivery over the next year, yesterday closed at $5.137
per MMBtu, near a two-year high but down less than 1 cent on the day.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
30-Jan |
31-Jan |
3-Feb |
4-Feb |
5-Feb |
|
Henry Hub |
5.76 |
5.58 |
5.72 |
6.26 |
6.24 |
New York |
7.42 |
6.41 |
6.53 |
8.02 |
7.39 |
Chicago |
5.62 |
5.45 |
5.70 |
6.27 |
6.25 |
Cal. Comp. Avg,* |
5.10 |
4.93 |
5.02 |
5.24 |
5.27 |
Futures ($/MMBtu) |
|
|
|
|
|
Mar delivery |
5.583 |
5.605 |
5.766 |
5.762 |
5.644 |
Apr delivery |
5.270 |
5.345 |
5.485 |
5.512 |
5.414 |
*Avg. of NGI's reported
avg. prices for: Malin, PG&E
citygate, |
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and Southern California
Border Avg. |
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Source: NGI's Daily Gas
Price Index (http://intelligencepress.com). |
Working gas in storage as of January 31 was 1,521
Bcf or 15.9 percent below the 5-year average for the week, according to EIA's Weekly
Natural Gas Storage Report. (See Storage Figure)
The implied net withdrawal was 208 Bcf, which is 97 Bcf more than the 5-year
average withdrawal for the week. In the Mid-Atlantic and New England regions,
the weather was, respectively, 10 percent and 4 percent colder than normal as
measured by heating degree days (HDDs) weighted for the population with space
heating from natural gas, according to the National Weather Service (See Temperature Map) (See Deviation Map). However, a warm week in the West resulted in HDDs for the United
States as a whole being about 9 percent lower than normal for the week. Warm
temperatures this winter have resulted in storage inventories in the West
region remaining over 20 percent higher than the 5-year average. However, the
opposite has occurred in the Consuming East region, where inventories have
dropped to 805 Bcf with two months of the traditional heating season remaining.
For the Lower 48 States as a whole, withdrawals near the 5-year average for the
rest of the heating season would result in inventories dipping to 890 Bcf,
which is more than 30 percent less than the 5-year average. This would be the lowest level of working
gas stocks at the end of the heating season since 2001.
All Volumes
in Bcf |
Current
Stocks 1/31/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 1/24/03 |
|
East Region |
805 |
1,063 |
-24.3% |
-141 |
946 |
|
West Region |
285 |
235 |
21.3% |
-11 |
296 |
|
Producing
Region |
431 |
510 |
-15.5% |
-56 |
487 |
|
Total Lower
48 |
1,521 |
1,808 |
-15.9% |
-208 |
1,729 |
|
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 Releases Report on the Role of LNG in the United States: The Energy Information Administration
(EIA) has posted a feature article on its web site on the role of liquefied
natural gas (LNG) in the natural gas industry titled U.S.
LNG Markets and Uses. The article examines different aspects of LNG
operations, paying particular attention to marine terminals, peak-shaving
storage facilities, and facilities serving niche markets such as LNG as a
vehicular fuel. LNG is natural gas that has been cooled to about minus 260
degrees Fahrenheit for shipment and/or storage as liquid. LNG imports are an
important source of incremental supplies to the US. Also, LNG from storage is a key supply source for meeting the peak-day
demands of local utilities, particularly in the Northeast. The report
highlights the role of these LNG storage facilities, as well as proposed
expansion plans at existing U.S. LNG import terminals and proposals for new
import facilities.
Pipeline Disturbance in the
Midwest: A critical outage continues
in effect along ANR pipeline's Southwest Mainline upstream of its New Windsor
Compressor Station in Illinois, according to a notice to shippers released on
Wednesday (February 5). Late Sunday, February 2, a rupture occurred along the
pipeline segment, which is located near Viola, Illinois. No injuries were
reported as a result of the blast, and natural gas was rerouted, precluding
interruptions in service, according to the pipeline company. However, ANR has
notified shippers that the availability of interruptible transportation may
depend on firm service nominations. Determination of the cause of the rupture
likely will not be possible until the results of metallurgical testing of the
damaged section of pipeline are available. The ANR Pipeline Company, which is
owned by El Paso Corporation, operates roughly 10,600 miles of pipeline serving
the central United States with peak-day capacity of 6 billion cubic feet per
day.
Summary:
Natural gas spot and futures
prices registered further gains as cold temperatures blanketed much of the
Midcontinent and parts of New England. Natural gas in storage declined to 1,521
Bcf after another large withdrawal totaling 208 Bcf for the week ending January
31. Weekly net withdrawals have totaled over 200 Bcf for three consecutive
weeks, resulting in inventories falling to 15.9 percent below the 5-year
average.
Natural
Gas Summary from the Short-Term Energy Outlook