for week ending April 30, 2003 | Release date: May 1, 2003 | Previous weeks
Spot natural gas prices at
most trading locations in the Lower 48 States dropped $0.25-$0.50 per MMBtu
this week (Wednesday, April 23-Wednesday, April 30) as springtime temperatures prevailed
in most areas. The Henry Hub spot price decreased 33 cents per MMBtu to $5.25,
while spot price declines in the Northeast were generally greater at between
$0.36 and $0.50. The price of the NYMEX futures contract for June delivery,
which became the near-month contract on Tuesday, April 29, has declined 29
cents since last Wednesday. The June contract settled at $5.385 yesterday
(April 30). Natural gas in storage increased to 741 Bcf as of Friday, April 25,
which is about 43.2 percent below the 5-year average. The spot price for West
Texas Intermediate (WTI) crude oil decreased $1.95 per barrel or about 7
percent since last Wednesday to trade yesterday at $26.09 per barrel or $4.50
per MMBtu.
With price declines in four consecutive sessions
this week (Wednesday-Wednesday), the Henry Hub spot price fell to $5.11 per
MMBtu on Tuesday before recovering to $5.25 yesterday (April 30), which is
slightly less than 6 percent lower than last Wednesday. Price movements this
week were similar at most producing-region trading locations, including the
Midcontinent and East Texas, where slight price increases of yesterday helped
offset net declines. Prices in the Rockies proved an exception as traders
anticipated Kern River Gas Transmission's expansion coming on-line today. The
expansion increases the capacity of the pipeline — and deliverability out of
the region (and into California) — by 900 million cubic feet per day. The Opal
Hub in Wyoming yesterday gained $1.18 per MMBtu to $4.28, a net gain for the
week of 74 cents. As the shoulder month of April came to a close this week,
reduced weather-related demand brought Northeast prices back below the $6 mark
at most locations. For the week, the price for gas delivered at New York
citygates off of Transcontinental Gas Pipe Line dropped $0.50 per MMBtu to
$5.71.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
24-Apr |
25-Apr |
28-Apr |
29-Apr |
30-Apr |
|
Henry Hub |
5.47 |
5.38 |
5.28 |
5.11 |
5.25 |
New York |
5.99 |
5.97 |
5.81 |
5.64 |
5.71 |
Chicago |
5.52 |
5.38 |
5.23 |
5.04 |
5.22 |
Cal. Comp. Avg,* |
5.19 |
5.05 |
5.02 |
4.75 |
4.90 |
Futures ($/MMBtu) |
|
|
|
|
|
May delivery |
5.474 |
5.477 |
5.123 |
expired |
expired |
Jun delivery |
5.553 |
5.541 |
5.190 |
5.236 |
5.385 |
Jul delivery |
5.630 |
5.606 |
5.265 |
5.306 |
5.465 |
*Avg.
of NGI's reported avg. prices for: Malin, PG&E citygate, |
|||||
and
Southern California Border Avg. |
|||||
Source:
NGI's Daily Gas Price Index (http://intelligencepress.com). |
The expiration of the futures contract for delivery
to the Henry Hub in May coincided with a sharp sell-off on Monday (April 28) at
the NYMEX. The May contract price dropped 35 cents per MMBtu on the day to
$5.123. This final settlement price for the May contract was 54 percent higher
than its settlement last year at $3.319 per MMBtu, but 10 percent lower than
its high of $5.71 per MMBtu as the near-month contract on April 18. Although
Monday's sell-off also resulted in the June contract dropping $0.286 per MMBtu
on the week, the contract has gained $0.20 per MMBtu in its first two trading
sessions as the near month contract, including a 15-cent increase yesterday to
a daily settlement of $5.385.
Estimated Average Wellhead Prices |
||||||
|
Oct-02 |
Nov-02 |
Dec-02 |
Jan-03 |
Feb-03 |
Mar-03 |
Price ($ per Mcf) |
3.35 |
3.59 |
3.84 |
4.47 |
5.45 |
6.69 |
Price ($ per MMBtu) |
3.44 |
3.67 |
3.93 |
4.58 |
5.58 |
6.86 |
Note: The price
data in this table are a pre-release of the average wellhead price that will
be published in forthcoming issues of the Natural Gas Monthly. Prices were converted from $ per Mcf to $
per MMBtu using an average heat content of 1,025 Btu per cubic foot as
published in Table A2 of the Annual Energy Review 2001. |
||||||
Source: Energy
Information Administration, Office of Oil and Gas. |
Working gas in storage as of April 25 totaled 741
Bcf, which is 43.2 percent below the 5-year average for the week, according to
EIA's Weekly Natural Gas Storage Report. (See Storage Figure). With weather extremes lacking for a
second consecutive week, the implied net injection was 57 Bcf, or about 84
percent more than the 31 Bcf injected during last year's comparable reporting
week. The 5-year average injection for the week is 47 Bcf. This week marks the
latest in the refill season that inventories have climbed back above 700 Bcf in
the 10-years of EIA's weekly storage database. However, injection activity has
been relatively robust in the past two weeks with total net injections of 118
Bcf. The accelerated injection pace was most noticeable in the Consuming Region
East this week, as net injections were 40 percent higher than the 5-year
average of 25 Bcf for the week. After a long winter, much of the Northeast has
warmed and temperatures during the report week were only slightly cooler than
normal, as measured by heating degree days (HDDs), according to the National
Weather Service. In New England and the Middle Atlantic, HDDs were,
respectively, 2 percent and 5 percent greater than normal. (See
Temperature Map) (See Deviation Map).
Cooling Degree Days (CDDs) have not accumulated substantially so far this
spring.
All Volumes
in Bcf |
Current
Stocks 4/25/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 4/18/03 |
|
East Region |
333 |
653 |
-49.0% |
35 |
298 |
|
West Region |
180 |
192 |
-6.3% |
6 |
174 |
|
Producing
Region |
228 |
459 |
-50.3% |
16 |
212 |
|
Total Lower
48 |
741 |
1,304 |
-43.2% |
57 |
684 |
|
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 Industry/Market Trends:
FERC Holds Technical
Conference on Natural Gas Price Reporting: The Federal Energy
Regulatory Commission (FERC) held a conference on Thursday, April 24 to discuss
the issues of collection and publication of natural gas price information. The conference, organized and run by FERC's
Office of Market Oversight and Investigations, heard from a broad spectrum of
natural gas industry participants, officials of two large commercial exchanges,
commissioners from both FERC and the Commodity Futures Trading Commission, and
a number of FERC staff. Nearly all
participants agreed that, in the wake of revelations of deceptive trading
practices and the indictment of a number of traders for false price reporting,
something must be done to restore confidence in the accuracy, reliability, and
integrity of reported natural gas prices. Presentations by private sector price reporting organizations and those
favoring a "third-party" option for price reporting were followed by the
reactions and responses from key natural gas industry groups, a large financial
organization, and representatives of two academic organizations. While no consensus was reached about a
specific course of action, most participants expressed a preference for a
private-industry driven solution, but were willing to consider some form of
third-party involvement. One
possibility that attracted a good deal of interest was the idea of creating or
commissioning a "self-regulating organization" (SRO) (the New York Mercantile
Exchange was cited as one example of an SRO) to collect, process, and publish
price information. This SRO would be
overseen by FERC. Most participants
responded favorably to recommendations originally put forth by the recently
formed industry Committee of Chief Risk Officers that, at a minimum, price
reporting must consist of transaction-level detail, must come from
"back-office" sources (not traders), and must include counterparty information.
The requirement for counterparty information was the most controversial element
owing to confidentiality concerns.
Summary:
Natural
gas prices at most market locations softened between $0.25-$0.50 per MMBtu amid
expectations that the pace of storage injections would continue to accelerate
as most of the country experiences more moderate temperatures. However, prices
remained over the $5 mark at the NYMEX and at most spot trading location as
market tightness is expected through the refill season. As of April 25, natural
gas in underground storage was 741 Bcf, or 43.2 percent below the 5-year
average for the report week.
Natural Gas Summary from the Short-Term Energy Outlook