for week ending February 12, 2003 | Release date: February 13, 2003 | Previous weeks
Spot
prices continued at unusually high levels over the past week (Wednesday to
Wednesday, February 5-12), although regional trends were mixed. Northeast prices soared, prices in the
Midwest and in California rose modestly, and prices at most other market
locations declined. At the Henry Hub,
the average spot price fell 4 cents per MMBtu for the week, ending trading
yesterday (Wednesday, February 12) at $6.20. The NYMEX futures contract for March delivery broke the $6 barrier on
Friday, then declined from that level to end trading yesterday at $5.785 per
MMBtu. Beginning last Wednesday, the
nation returned to the deep freeze after a brief respite of generally
warmer-than-normal temperatures that began the last day of January. Average temperatures ranged up to 13 degrees
below normal in every region of the country beginning Wednesday and continuing
through last weekend. Working gas in
storage was 1,371 Bcf as of February 7, 2003, which is about 19 percent
below the previous 5-year average. The spot price for West Texas Intermediate (WTI)
crude oil rose in 4 of the 5 trading days since last Wednesday, climbing to
$35.83 per barrel, or $6.18 per MMBtu, yesterday, an increase of $1.92 per
barrel ($0.33 per MMBtu) since Wednesday, February 5.
Spot prices were on divergent paths over the past
week. Spot prices at most
production-area locations fell, while prices in major market areas were
mixed. Spot prices at many Northeast
market locations increased significantly to average levels exceeding $10 per
MMBtu in yesterday's trading. Weekly
price increases included a rise of $3.53 per MMBtu in TRANSCO Zone 6 for New
York delivery, to $10.92 per MMBtu, and an increase of $6.19 for Algonquin
citygates, to $13.81 per MMBtu—the highest price in the nation yesterday. Major pipelines serving the region
instituted various restrictions such as severely limiting or eliminating
interruptible transportation and increasing penalties for overpulls, which put
upward pressure on prices. In the
Midwest, price increases were much more modest, as the Chicago citygate price
increased just 2 cents to $6.27 per MMBtu. Midcontinent prices fell by an average of 20 cents, as temperatures
began to moderate in that region over the past few days. In production areas,
West Texas showed the largest average price decrease, falling 31 cents per
MMBtu to an average of $5.58 per MMBtu in yesterday's (February 12)
trading. East Texas locations fell by
an average of 13 cents, to $5.97 per MMBtu, while locations in the Gulf Coast
area fell from 2 to 13 cents per MMBtu on the week. The Henry Hub average spot price dropped 4 cents on the week to
$6.20 per MMBtu. Prices at the Henry
Hub exceeded $6 per MMBtu each day, which is the first time since the week of
January 22-26, 2001.
Futures prices exhibited net increases over the
week, as the settlement price for the near-month contract (for March delivery)
settled yesterday at $5.785 per MMBtu—$0.141 higher than last Wednesday. Weekly price increases for out-month
contracts beginning with and extending through the next heating season rose
even more, with increases of about 18 to 21 cents per MMBtu. On Friday, February 7, the March contract
reached $6.043 per MMBtu—highest of any contract for March delivery since
futures trading in gas began in 1990. It also reached an approximate two-year
high for the near-month contract.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
6-Feb |
7-Feb |
10-Feb |
11-Feb |
12-Feb |
|
Henry Hub |
6.08 |
6.29 |
6.34 |
6.19 |
6.20 |
New York |
7.15 |
7.70 |
8.25 |
9.87 |
10.92 |
Chicago |
6.11 |
6.30 |
6.40 |
6.38 |
6.27 |
Cal. Comp. Avg,* |
5.19 |
5.30 |
5.42 |
5.39 |
5.43 |
Futures ($/MMBtu) |
|
|
|
|
|
Mar delivery |
5.828 |
6.043 |
5.852 |
5.977 |
5.785 |
Apr delivery |
5.578 |
5.780 |
5.617 |
5.722 |
5.560 |
*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 1,371 Bcf as of February
7, according to EIA's Weekly Natural
Gas Storage Report, with implied net withdrawals of 150 Bcf–the first
time in 4 weeks that withdrawals have been less than 200 Bcf (See
Storage Figure). This
reduced level of withdrawals compared with previous weeks likely reflects the
effects of warmer-than-normal temperatures in the Northeast, Midwest, and much
of the Mid-Atlantic regions in the first 4 days of the report week. (See Temperature Map)
(See Deviation Map). Working gas levels in the Producing region
are still within the high-low range over the past 5 years, and West region
inventories are just 6 Bcf less than their 5-year high. However, stocks in the Consuming Region East
(See Regional Storage Figures),
at 716 Bcf, are just 9 Bcf greater than the 5-year weekly low of 707 Bcf, which
was recorded for February 9, 2001. The
average weekly withdrawal in the Consuming Region East for the final 7 weeks of
the heating season over the past 5 years has been about 56 Bcf. If withdrawals over the next 7 weeks in the
East match this average, stocks as of March 28 in the East will be about 50 Bcf
below the lowest end-of-heating season level over the past 5 years (377 Bcf,
end of March 2001). However they would
remain roughly 40 Bcf above the record low of 285 Bcf, which occurred on April
12, 1996.
All Volumes in Bcf |
Current Stocks 2/7/03 |
Estimated Prior 5-Year (1998-2002) Average |
Percent Difference from 5 Year Average |
Implied Net Change from Last Week |
One-Week Prior Stocks 1/31/03 |
|
East Region |
716 |
984 |
-27.2% |
-89 |
805 |
|
West Region |
268 |
228 |
17.5% |
-17 |
285 |
|
Producing
Region |
387 |
482 |
-19.7% |
-44 |
431 |
|
Total Lower
48 |
1,371 |
1,695 |
-19.1% |
-150 |
1,521 |
|
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. |
||||||
EIA Releases 2001 Annual Data: The Energy
Information Administration (EIA) has posted on its web site the data
publication: Natural Gas Annual 2001. With some 25 data tables (many spanning the
5-year period 1997-2001), over 30 graphs and figures, and separate sections for
each of the 50 States and the District of Columbia, the Natural Gas Annual 2001 presents EIA's most current and complete
annual information about the natural gas industry. The Natural Gas Annual 2001 highlights key data trends and changes within the
industry in 2001, and also reflects recent changes in
EIA's industry accounting methodology, primarily with respect to the
consumption of natural gas for electricity generation. These changes have been driven by the shift
in electric power generation from a strictly regulated industry to one in which
non-regulated companies hold a major and expanding share of the market. Whereas in prior years natural gas
consumption by non-utility generators was counted as part of the industrial
sector, EIA now breaks out consumption for electricity generation according to
whether the generated electricity is for sale or primarily for use by the
company that generates it. The reallocation of a significant volume of gas from
the industrial to the electric power sector and the use of a new data source
for non-utility gas consumption alters the face of the industry and markets
suggested by the data. The Natural Gas Annual 2001 provides the first detailed look at the
results of these changes.
Natural Gas Summary from the
Short-Term Energy Outlook:
EIA projects that natural
gas wellhead prices will remain relatively high through the rest of the winter
and perhaps well into spring, with prices averaging $4.90 per MMBtu through
March and $4.45 in April (Short-Term Energy Outlook, February 2003). Wellhead prices for the overall heating season
(November through March), assuming normal weather for the rest of the winter,
are expected to average $4.22 per MMBtu, or $1.86 more than last winter's
level. Spot prices at the Henry Hub have been generally above $5.00 per MMBtu
thus far in 2003, and briefly rose above $6.00 during
the third week of January as Arctic weather covered much of the nation. Prices
again topped $6.00 on February 4 and stayed above this threshold through
February 12 in response to another blast of cold weather. Overall in
2003, average wellhead prices are projected to increase about $1.38 per MMBtu
over the 2002 level to $4.25 per MMBtu. This
projection is based on the expectation of lower volumes of underground gas in
storage compared with last year and continued increases in demand (particularly
in the first quarter) over 2002 levels. Cold temperatures since the first of
the year have increased heating demand and led to a more rapid drawdown of
storage stocks than previously anticipated. As of February 7, 2003, working gas in storage was about
37 percent lower than year-earlier levels and 19 percent below the previous
5-year average. In 2004, continued tightness of domestic natural gas supply is expected
to keep the average wellhead price near the 2003 level.
Based on new data provided
by the Minerals Management Service, estimates of dry natural gas production in
2002 have been revised downward to 18.9 trillion cubic feet (Tcf), which is 2.3
percent less than the 19.4 Tcf produced in 2001. Some of the reduction is due
to outages in September and October related to hurricane activity. At least
moderate production increases are expected in 2003 and 2004 as high natural gas
prices and strong near-term demand pressures drive drilling activity and well
completions to very robust levels over the period. Also, after growing by only
1.1 percent in 2002 owing to high stocks and lower demand, net imports of
natural gas are expected to increase by 5.6 percent in 2003, which should
relieve some of the potential pressure on the domestic market.
Total natural gas demand in
2002, based on data reported through September, declined by an estimated 1.4
percent from the 2001 level, mainly because of overall weakness in the
industrial sector. However, solid growth in natural gas demand seems likely in
2003, especially if industrial sector consumption expands significantly as
expected. In 2004, natural gas demand is projected to rise by an additional 2.4
percent as industrial demand continues its recovery from its 2002 lows.
Short-Term Natural Gas Market Outlook,
February 2003
|
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|
History |
Projections |
||||
|
Nov-02 |
Dec-02 |
Jan-03 |
Feb-03 |
Mar-03 |
Apr-03 |
PRICES ($/MMBtu) |
|
|
|
|
|
|
Average
Wellhead Price |
3.50 |
3.74 |
4.08 |
4.73 |
5.07 |
4.45 |
Residential Price |
8.19 |
7.79 |
8.05 |
8.26 |
8.62 |
9.25 |
Electric
Utilities Price |
4.27 |
4.61 |
5.02 |
5.72 |
5.98 |
5.24 |
|
|
|
|
|
|
|
SUPPLY (Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry
Gas Production |
1.53 |
1.58 |
1.64 |
1.47 |
1.64 |
1.57 |
Net
Imports |
0.32 |
0.34 |
0.35 |
0.32 |
0.34 |
0.32 |
Imports |
0.36 |
0.37 |
0.38 |
0.35 |
0.37 |
0.34 |
Exports |
0.04 |
0.04 |
0.03 |
0.02 |
0.03 |
0.03 |
Suppl.
Gaseous Fuels |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
Total New
Supply |
1.858 |
1.929 |
2.002 |
1.801 |
1.984 |
1.888 |
|
|
|
|
|
|
|
Working
Gas in Storage |
|
|
|
|
|
|
Opening |
3.149 |
2.933 |
2.368 |
1.521 |
1.153 |
0.975 |
Closing |
2.933 |
2.368 |
1.521 |
1.153 |
0.975 |
1.126 |
Net
Storage Withdrawal |
0.216 |
0.565 |
0.847 |
0.368 |
0.178 |
-0.151 |
|
|
|
|
|
|
|
Total
Supply |
2.074 |
2.494 |
2.849 |
2.169 |
2.162 |
1.737 |
|
|
|
|
|
|
|
Balancing
Item |
-0.145 |
-0.142 |
-0.207 |
0.230 |
0.089 |
0.087 |
|
|
|
|
|
|
|
Total
Primary Supply |
1.928 |
2.352 |
2.642 |
2.399 |
2.250 |
1.824 |
|
|
|
|
|
|
|
DEMAND (Trillion Cubic Feet) |
|
|
|
|
|
|
Lease
& Plant Fuel |
0.098 |
0.102 |
0.103 |
0.093 |
0.103 |
0.098 |
Pipeline
Use |
0.053 |
0.068 |
0.077 |
0.067 |
0.063 |
0.050 |
Delivered
to Consumers |
1.778 |
2.182 |
2.462 |
2.239 |
2.085 |
1.675 |
Residential |
0.471 |
0.701 |
0.885 |
0.789 |
0.662 |
0.418 |
Commercial |
0.273 |
0.357 |
0.424 |
0.388 |
0.347 |
0.249 |
Industrial |
0.664 |
0.736 |
0.750 |
0.704 |
0.699 |
0.645 |
Electric
Power |
0.370 |
0.388 |
0.403 |
0.358 |
0.377 |
0.364 |
Total
Demand |
1.928 |
2.352 |
2.642 |
2.399 |
2.250 |
1.824 |
Source: Energy Information Administration, Short-Term Energy Outlook,
February 2003.