for week ending April 16, 2003 | Release date: April 17, 2003 | Previous weeks
Spot and futures prices
moved up for the second week in a row. Price increases for the week (Wednesday, April 9 to Wednesday, April 16)
were generally around a half dollar in both the spot and futures markets—about
twice the increase in spot prices (in most markets) the previous week, and
three times the increase in the near-month (May delivery) futures contract
price. At the Henry Hub, the average
spot price rose 51 cents on the week, to $5.62 per MMBtu, an increase of nearly
10 percent. The settlement price for
the May contract increased by just over 9 percent for the week, gaining a
cumulative $0.482 to settle yesterday (Wednesday, April 16) at $5.677 per
MMBtu. These price increases occurred
despite a gradual warming trend since last Wednesday in every region of the
country except in the West. Working gas
in storage was 623 Bcf as of April 11, which was 49 percent below the previous
5-year (1998-2002) average, and a new record low level over the 9 years of EIA
data. The spot price for West Texas Intermediate crude oil rose for the week by
23 cents per barrel, to $29.16 per barrel ($5.03 per MMBtu) in yesterday's
trading.
Spot prices moved higher at most
market locations last week, despite a gradual warm-up from the unusually cold
weather of the previous week, bringing daily average temperatures up to or
slightly above normal in most regions of the country by the end of this past
weekend. The one market area that
bucked the trend was the Rocky Mountains, where most market locations saw
prices fall from 9 to 25 cents per MMBtu, as demand evaporated with the
increasingly spring-like temperatures, although a few locations saw significant
price increases, mostly due to short-term maintenance actions that curtailed
competing supply from other locations. Overall, spot prices in the Rockies averaged $4.04 per MMBtu yesterday
(Wednesday, April 16), down a penny from the previous Wednesday. For a change, Northeast prices generally
experienced the smallest increases, averaging 25 cents per MMBtu for the
week. For the week, the New York
citygate price increased $0.22 per MMBtu, to $6.64. Elsewhere, average weekly price increases in other regional
markets ranged from $0.43 in West Texas to $0.59 at Alabama/Mississippi
points. The Chicago citygate price
moved up 52 cents per MMBtu to $5.69, while the PG&E citygate price gained
54 cents to $5.57 per MMBtu.
On the NYMEX, futures
prices experienced strong gains, as settlement-price increases for contracts
for delivery through the end of the next heating season ranged from $0.391 per
MMBtu (March 2004 delivery) to $0.529 per MMBtu (July 2003 delivery). The May contract settlement price rose on 4
out of the 5 trading days in the week, as it gained $0.481 per MMBtu on the
week, settling yesterday at $5.677. This is the highest settlement price for the May contract since becoming
the near-month contract on March 28. Futures prices surged higher last Thursday (April 10) as the market
reacted to the report of net withdrawals from storage for the week ended April
4. Much of the gain in futures prices
may be attributable to concerns about storage stocks and the need for refill
volumes.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
10-Apr |
11-Apr |
14-Apr |
15-Apr |
16-Apr |
|
Henry Hub |
5.18 |
5.28 |
5.28 |
5.53 |
5.62 |
New York |
6.07 |
5.89 |
5.70 |
6.12 |
6.64 |
Chicago |
5.21 |
5.26 |
5.22 |
5.48 |
5.69 |
Cal. Comp. Avg,* |
4.88 |
4.97 |
4.97 |
5.20 |
5.35 |
Futures ($/MMBtu) |
|
|
|
|
|
May delivery |
5.419 |
5.411 |
5.552 |
5.653 |
5.677 |
Jun delivery |
5.491 |
5.500 |
5.627 |
5.739 |
5.760 |
*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 623 Bcf as of April 11,
according to EIA's Weekly Natural Gas Storage Report. This establishes a
new record-low weekly inventory level, dipping 13 Bcf below the previous record
low, set just 4 weeks ago (stocks as of March 14, 2003) (See Storage Figure). A new record
low was also set in the East Consuming Region, where the bulk of net
withdrawals occurred. The implied total
net withdrawal of 48 Bcf for the Lower 48 States also set the record for the
largest withdrawal for this week in the 9-year span of EIA data, and contrasts
sharply with the 5-year average stock change, which is a net injection of 21
Bcf. The second largest withdrawal for
this week was 36 Bcf in 1996. Typically, storage activity tends to be quite variable at the end of
March and beginning of April. Prior to
this year, national inventory levels for this week showed an even split of 4
years of net injections and 4 years of net withdrawals. However, 4 of the previous 5 years
(1998-2002) have recorded net injections. The net withdrawals in the East and Producing regions likely resulted
from unseasonably cold temperatures in those regions. According to the latest National Weather Service data,
gas-customer weighted heating degree days (HDD) along the Atlantic coast and in
the West South Central division were well above normal for the week (See Temperature Map) (See Deviation Map).
All Volumes
in Bcf |
Current
Stocks 4/11/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 4/4/03 |
|
East Region |
264 |
610 |
-56.7% |
-34 |
298 |
|
West Region |
167 |
183 |
-8.7% |
0 |
167 |
|
Producing
Region |
192 |
428 |
-55.1% |
-14 |
206 |
|
Total Lower
48 |
623 |
1,221 |
-49.0% |
-48 |
671 |
|
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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Other Industry/Market Trends:
FERC and the Coast Guard
Take Actions on Pending LNG Projects. On April 10, 2003, the Federal Energy Regulatory Commission (FERC) gave
final approval for an expansion project at the Elba Island liquefied natural
gas (LNG) facility that would nearly double its storage and firm sendout
capacities to 7.7 Bcf and 806 MMcf/day, respectively. The Commission also granted a preliminary determination for AES
Ocean Express, LLC to construct, own, operate, and maintain approximately 54.3
miles of 24-inch pipe to bring natural gas from an offshore receipt point at
the boundary between the Exclusive Economic Zone (EEZ) of the United States and
the Commonwealth of the Bahamas to onshore delivery points in Broward County,
Florida. This preliminary determination allows the project to move towards the
pending environmental review process. FERC also sent letters to the Secretary of Defense and the Secretary of
State requesting a Presidential Permit that would authorize Tractebel Calypso
Pipeline, LLC to construct, install, own, operate, and maintain certain natural
gas pipeline and related facilities at the boundary of the United States EEZ
and the Bahamas EEZ. In a Federal
Register notice dated April 7, 2003, the U.S. Coast Guard and the Maritime
Administration (MARAD) announced their intent to prepare an environmental
impact statement for the Port Pelican LLC Deepwater project, which if approved,
would allow the construction of an LNG
deepwater port and associated anchorage in the Gulf of Mexico, approximately 36
miles south-southwest of Fresh Water City, Louisiana. Port Pelican would deliver
natural gas to the U.S. Gulf Coast
using existing gas supply and gathering systems in the Gulf of Mexico and
southern Louisiana. This would be the
first terminal to fall under the new federal guidelines that cede regulatory
oversight authority for offshore facilities to the Coast Guard instead of FERC.
Summary:
Spot and futures prices
increased for a second consecutive week, despite a gradual warming trend across
much of the country. Demand for gas to
refill storage volumes likely supported spot prices and concerns about storage
levels and the progress of inventory refill combined to put upward pressure on
prices for future delivery. Storage
volumes fell to a new record low of 623 Bcf for the week ended April 11.