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Overview:  Thursday, February 20, 2003 (next release 2:00 p.m. on February 27)

Since Wednesday, February 12, natural gas spot prices have decreased at nearly all locations in the Lower 48 States, falling up to $6.03 per MMBtu.  For the week (Wednesday-Wednesday), prices at the Henry Hub decreased 10 cents or roughly 2 percent to $6.07 per MMBtu. However, prices remain close to their highest levels since late January 2001.  The price of the NYMEX futures contract for March delivery at the Henry Hub increased roughly 35 cents per MMBtu or 6 percent since last Wednesday to settle at $6.134 per MMBtu yesterday (February 19).  Natural gas in storage decreased to 1,168 Bcf for the week ended Friday, February 14, which is about 27 percent below the 5-year average.  The spot price for West Texas Intermediate (WTI) crude oil increased $1.19 per barrel or about 3 percent since last Wednesday to trade yesterday at $37.02 per barrel or $6.38 per MMBtu.




Spot prices generally were lower yesterday compared with 7 days ago, keyed by significant price drops on Thursday, February 13 and Wednesday, February 19.  Last Thursday’s large drop in prices can be attributed to anticipation of lighter demand during the President’s Day weekend. Yesterday’s price decreases likely resulted from moderating temperatures and an expected warming trend through the remainder of the week, following the blizzard and unusually low temperatures across most of the Northeast region over the President’s Day weekend.  The steepest declines since last Wednesday occurred in the Northeast region where price declines ranged from $0.81 to $6.03 per MMBtu. Prices at the New York citygate fell $3.04 per MMBtu since last Wednesday, however, they remain among the highest in the nation at $7.88.  Prices on the Algonquin system, which serves the New England region, also tumbled $6.03 per MMBtu since last Wednesday.  Prices at most markets outside the Northeast fell by 49 cents per MMBtu or less, with the larger declines in the Rocky Mountains region, where price drops were generally larger than 18 cents per MMBtu.


At the NYMEX, the price of the futures contract for March delivery at the Henry Hub declined by about 35 cents since Wednesday, February 12, to settle at $6.134 per MMBtu on Wednesday, February 19.  The price of the futures contracts for April 2003 delivery, the first month of the injection season, increased by roughly 35 cents per MMBtu to $5.909 since last Wednesday.  The basis differentials between the Henry Hub spot price and the March futures contract declined since last week, and the spot price fell below the nearby month futures contract for the first time since the first week of February.  Similarly, the basis differential between the spot price and the April futures contract also declined since last Wednesday, however the spot price remains about 19 cents or 3 percent greater than the April futures price.  This combination of price patterns would provide continued economic incentives to withdraw gas from storage despite slackening demand for natural gas.


Spot Prices ($ per MMBtu)











Henry Hub






New York












Cal. Comp. Avg,*






Futures ($/MMBtu)






Mar delivery






Apr 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 (



Working gas in storage was 1,168 Bcf for the week ended Friday, February 14, 2003, according to the EIA Weekly Natural Gas Storage Report.  This is roughly 27 percent below the 5-year average for the report week, and more than 42 percent below the level last year for the same week (See Storage Figure).  However, inventories were nearly 9 percent above the level reported 2 years ago at this time.  The implied net withdrawal for the week was 203 Bcf, which is more than double the 5-year average of 92 Bcf for the week.  This is the fourth week in the past five weeks in which net withdrawals were greater than 200 Bcf.  In the 5-week period since the week ended Friday, January 17, net withdrawals from storage have totaled 1,027 Bcf for an average weekly withdrawal of 205 Bcf.  This is the largest 5-week withdrawal total in the 9-year EIA historical database.  Cold temperatures in the northern regions of the country contributed to the relatively large withdrawals from storage (See Temperature Map) (See Deviation Map).  According to the National Weather Service, for the week ended Saturday, February 15, gas-weighted heating degree-days (HDD) in the New England and Middle Atlantic Census Regions were 19 percent and 22 percent above normal and 28 percent and 40 percent greater than for the same report week last year, respectively.  Similarly, heating degree days were more than 11 percent above normal in the East North Central region, exceeding the level last year at this time by more than 42 percent.


All Volumes in Bcf

Current Stocks 2/14/03

Estimated Prior 5-Year (1998-2002) Average

Percent Difference from 5 Year Average

Implied Net Change from Last Week

One-Week Prior Stocks 2/7/03

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:

Minerals Management Service Sets Plans for March Lease Sale: The Minerals Management Service (MMS) on Friday, February 14, announced the final terms of Sale 185 for oil and gas leases in the Central Gulf of Mexico. The sale, scheduled for March 19 in New Orleans, includes 4,460 available blocks covering about 23.4 million acres. Blocks are located between 3 and 210 miles offshore in water depths between 13 and 11,237 feet. MMS estimates that undiscovered economically recoverable hydrocarbons range from 270 to 650 million barrels of oil and 1.59 to 3.30 Tcf of natural gas. Recent royalty relief measures will stay in place. In water depths less than 200 meters (approximately 650 feet), royalty suspension will occur for the first 20 Bcf of gas production from wells drilled to new reservoirs at 15,000 feet or greater. Relief will also be granted for 5 million barrels of oil equivalent (BOE) (about 28 Bcf) for production in water depths of 400 to 799 meters (approximately 1,300 to 2,600 feet), and for 9 million BOE (or 51 Bcf) in water depths from 800 to 1,599 meters (approximately 2,600 to 5,200 feet), and 12 million BOE (67 Bcf) in depths of 1,600 meters (approximately 5,200 feet) and greater.


LNG Imports Decline Slightly in 2002: Liquefied natural gas (LNG) imports into the continental United States in 2002 declined to 229 Bcf of natural gas equivalent, or roughly 4 percent from the 2001 level, according to filings with the Office of Fossil Energy (OFE). In total, the United States received LNG from seven countries in 2002. While LNG volumes from Trinidad (currently, the largest source of LNG to the United States) grew more than 50 percent to 151 Bcf, imports from Algeria (formerly the sole LNG supplier) declined by almost 60 percent to just 26.6 Bcf. The United States also received LNG from Qatar, Nigeria, Oman, Brunei, and Malaysia. In its first full year of operations in more than 20 years, the Elba Island terminal (located near Savannah, GA) received 16.8 Bcf, all of which was imported by El Paso Global from Trinidad. Distrigas Corp. imported nearly 110 Bcf, an increase of 20 Bcf from 2001, at its Everett terminal (located near Boston, MA). All the imports received at the Everett terminal originated in Trinidad. Finally, the Lake Charles, LA., terminal received 102 Bcf, down from 145 Bcf in the previous year. BG LNG Services (owned by British Gas), CMS Marketing, and a Shell subsidiary were active in bringing LNG from a variety of countries into the Lake Charles terminal.



The net decline in spot prices during the week since February 12 was up to 49 cents at most market locations outside of the Northeast. The futures contract price for March delivery decreased by  35 cents, settling at $6.134 per MMBtu.  As of February 14, working gas storage stocks were 1,168 Bcf, which is about 27 percent below the 5-year average but still within the operating range of the past 5 years.


Natural Gas Summary from the Short-Term Energy Outlook

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