for week ending March 5, 2003 | Release date: March 6, 2003 | Previous weeks
Spot prices at many major
markets declined significantly from last Wednesday's (February 26) levels as temperatures
moderated somewhat over the weekend and again on Tuesday and Wednesday (March
5-6). The spot price at the Henry Hub
declined $2.55 per MMBtu from last Wednesday's level, despite peaking for the
week at $10.65 on Friday, to end trading yesterday (Wednesday, March 6) at
$7.81. The NYMEX futures contract for
April delivery began trading as the near-month contract on Thursday, February
27, and promptly surged to its all-time high to date of $8.101 per MMBtu on
Friday, before settling yesterday at $7.021. Natural gas stocks fell to 838 Bcf as of February 28, which is nearly 42
percent below the 5-year average. As of
yesterday, the WTI spot price had dropped $1.10 per barrel (or $0.19 per MMBtu)
from its price-spike level of $37.96 per barrel last Wednesday, to $36.86 per
barrel, or $6.36 per MMBtu.
Despite
a significant surge in prices on Friday and minor gains in mixed trading
yesterday, spot prices at most market locations ended the week (Wednesday to
Wednesday, February 26-March 5) lower, as moderating temperatures over the
weekend dampened demand, and markets' concerns about supply issues seemed to
diminish. The easing of demand also
contributed to the lifting of operational flow orders and relaxing of other
transportation restrictions on some pipelines early in the week, further
reducing pressure on prices in downstream markets. Nonetheless, week on week
price declines tended to be smallest in the high-gas consuming Midwest and
Northeast regions. The Chicago citygate
price fell $1.61 per MMBtu, to $9.01, while the New York citygate price
declined $1.31 per MMBtu, to $12.04. Price spikes yesterday at the New York citygate and other Northeast
market locations kept price declines from being much larger. The Rockies and California markets were
major exceptions to the downward price trend. Continuing cold winter weather in
the Rockies kept prices strong there. The first episode of persistently cold weather along the West Coast and
the routing of Canadian and West Texas gas to high-demand Midwest and Northeast
markets contributed to firm prices in California. Overall, volatility in spot market trading this week seems to be
declining. Daily price fluctuations are
well below the prior week, and the multiple-dollar daily price ranges
experienced at most market locations have contracted to mostly sub-$1 price
ranges beginning Monday.
On the futures market, in
its second day of trading as the near-month contract, the futures contract for
April delivery surged on Friday, apparently on the strength of short-term
weather forecasts calling for continued below-normal temperatures for the
northern half of the country through the middle of the month. The April contract gained nearly 62 cents
per MMBtu, settling at $8.101 on Friday. However, the price of the near-month contract has steadily declined thus
far this week, with Monday's trading bringing a major sell-off of the April
contract, resulting in a one-day drop of $0.939 per MMBtu. For the week, the April contract declined by
nearly 37 cents, to yesterday's settlement price of $7.021 per MMBtu. Since becoming the near-month contract last
Thursday, the April contract has fallen $0.464 per MMBtu.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
27-Feb |
28-Feb |
3-Mar |
4-Mar |
5-Mar |
|
Henry Hub |
8.45 |
10.65 |
8.56 |
7.76 |
7.81 |
New York |
10.49 |
15.78 |
11.53 |
9.58 |
12.04 |
Chicago |
8.40 |
15.24 |
9.32 |
9.51 |
9.01 |
Cal. Comp. Avg,* |
7.25 |
8.98 |
8.44 |
8.47 |
8.43 |
Futures ($/MMBtu) |
|
|
|
|
|
Apr delivery |
7.485 |
8.101 |
7.162 |
7.041 |
7.021 |
May delivery |
5.965 |
6.071 |
5.952 |
5.991 |
5.971 |
*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 was 838 Bcf as of February
28, according to EIA's Weekly Natural
Gas Storage Report, which is almost 42 percent below the prior 5-year
average. (See
Storage Figure). Implied
net withdrawals were 176 Bcf, which is more than twice the 5-year average
withdrawal for the week. This marks the
fourth time this heating season, and the second time in the month of February,
that implied net withdrawals have been more than double the 5-year
average. According to the latest
National Weather Service data, average temperatures for the week ended March 1
were below normal over the entire nation except for the state of Florida and
southern Georgia and Alabama (See Temperature Map)
(See Deviation Map). Gas customer-weighted heating degree days
(HDD) for the week exceeded normal by 10 percent or more in seven of the nine
Census divisions. The West North
Central and West South Central divisions, comprising the middle portion of the
country, recorded 33 percent and 69 percent higher-than-normal HDD. In the East region, the implied net
withdrawal of 96 Bcf brought inventory levels there to 403 Bcf, which is nearly
50 percent below the 5-year average. In
1996—the year in which Consuming East inventory levels reached their all-time
low of 285 Bcf on April 12—inventories in the East did not get to a comparably
low level (404 Bcf) until March 15
All Volumes
in Bcf |
Current
Stocks 2/28/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 2/21/03 |
|
East Region |
403 |
797 |
-49.9% |
-96 |
499 |
|
West Region |
198 |
196 |
1.0% |
-26 |
224 |
|
Producing
Region |
237 |
446 |
-4.6% |
-54 |
291 |
|
Total Lower
48 |
838 |
1,440 |
41.8% |
-176 |
1,014 |
|
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 Updates Web Site on Retail Gas Competition: EIA has updated its web site on the status of natural gas industry
restructuring in each state as of December 2002, focusing on the residential
customer class (Natural
Gas Restructuring). Enrollment in existing "customer choice" programs
generally increased in 2002 as the number of eligible customers grew
substantially and the number of competitive suppliers increased in several
states. Most of the enrollment increases can be attributed to the expansion of
existing programs into new geographic areas or new enrollment caps as part of
an approved phase-in to system-wide choice programs. In 2002, Florida was the
only state to start unbundling for the first time, approving two small pilot
programs for residential transportation service, while several states with
existing programs implemented more stringent credit requirements for
participating marketers and fine-tuned their programs. As of January 1, 2003,
21 states and D.C. have some form of choice program for residential gas
customers. Overall nearly 7 percent (4.1 million) of U.S. residential gas
customers (about 60.2 million) are buying gas from marketers, with the largest
numbers in Georgia (1.4 million), Ohio (1 million), Michigan (332,000), and New
York (319,000).
Summary:
Spot
prices retreated from the record-high levels of the previous week, as concerns
about supply adequacy for the rest of the heating season seemed to ease, aided
somewhat by a minor warming trend in some parts of the country. Futures prices likewise moved lower,
particularly for deliveries in out-months through July. Storage withdrawals for the previous week
were over twice the 5-year average, bringing working gas levels below 1,000 Bcf
for the first time since May 31, 2002.
Natural
Gas Summary from the Short-Term Energy Outlook