for week ending May 21, 2003 | Release date: May 22, 2003 | Previous weeks
Natural gas spot prices at
most market locations in the Lower 48 States have dipped 5 to 20 cents per
MMBtu since Wednesday, May 14. Although the slight easing appeared across the
board in the eastern two-thirds of the country, declines in the West were more
pronounced as Rockies prices fell as much as $0.65 per MMBtu. On the week
(Wednesday, May 14-Wednesday, May 21), the Henry Hub spot price dropped 10
cents per MMBtu to $6.07. The NYMEX futures contract for June delivery at the
Henry Hub fell just under 12 cents per MMBtu to a close of $6.198. Natural gas
in storage as of Friday, May 16, increased to 990 Bcf, which is 34.9 percent
below the 5-year average. The spot price for West Texas Intermediate (WTI)
crude oil traded at a 4-week high, rising $0.30 per barrel on the week to
yesterday's (May 21) closing price of $29.51 per barrel, or $5.09 per MMBtu.
Despite slight increases at many trading locations
yesterday (Wednesday, May 21), spot prices generally declined over the past
week as moderate weather patterns dominated the country. An increase of 13
cents per MMBtu to $6.07 at the Henry Hub in Louisiana yesterday was not enough
to offset this week's downward trend, in which most prices along the Gulf Coast
had dropped 20-30 cents per MMBtu prior to the start of trading yesterday.
Although prices at most trading locations in the Gulf Coast and East Texas
still hover near $6 per MMBtu, a lack of cooling demand in most regions and a
recent easing of nuclear plant-outages contributed to overall softening of
prices through the week. Rockies prices fell more steeply than other
producing-region prices as maintenance on Transwestern's San Juan Lateral
reduced flows from the region. On the week, the price at the El Paso non-Bondad
location fell 50 cents per MMBtu to $4.69. Meanwhile, the pipeline outage
likely contributed to prices strengthening at the Southern California Border,
where yesterday's price of $5.83 was 35 cents higher than last Wednesday. The
return of the 1,150 MW Comanche Peak 1 nuclear plant in Texas, which had been
offline for about a week following a lightning strike, slightly reduced market
tightness in the region. But the 1,250 MW South Texas Project 1 unit remains
offline. Other facility outages also occurred this week as ExxonMobil's Katy
processing plant near Houston was shut down after a fire at the complex last
week. The rupture of a portion of Houston Pipe Line serving a Texas refinery
yesterday stirred trading, but likely had more impact in oil markets than in
natural gas markets as the pipeline company said there would be no interruption
of service to other customers.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
15-May |
16-May |
19-May |
20-May |
21-May |
|
Henry Hub |
6.24 |
5.95 |
6.08 |
5.93 |
6.07 |
New York |
6.68 |
6.33 |
6.41 |
6.34 |
6.49 |
Chicago |
6.30 |
5.97 |
6.14 |
5.96 |
6.07 |
Cal. Comp. Avg,* |
5.62 |
5.44 |
5.57 |
5.50 |
5.70 |
Futures ($/MMBtu) |
|
|
|
|
|
Jun delivery |
6.131 |
6.122 |
6.015 |
6.056 |
6.198 |
Jul delivery |
6.221 |
6.212 |
6.118 |
6.152 |
6.297 |
*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). |
At the NYMEX, the price of the futures contract for
June delivery at the Henry Hub closed yesterday (May 21) at $6.198 per MMBtu,
which was about 12 cents lower than last Wednesday's daily settlement. The
near-month contract fell more than a combined 30 cents in three trading
sessions from last Thursday to Monday. Strong oil prices and renewed concerns
about the sufficiency of supplies promptly reversed the downward trend, as the
near-month contract gained just over 14 cents per MMBtu on Wednesday. While the
near-month contract dropped by just under 12 cents in value over the week, the
contracts for next winter have dipped 4-6 cents per MMBtu. As of the NYMEX
close on Wednesday, May 21, the 12-month strip, or the average cost of NYMEX
futures contracts over the next year, was $6.108 per MMBtu, which is down
almost 9 cents from last Wednesday's average of $6.195.
Estimated Average Wellhead Prices |
||||||
|
Nov-02 |
Dec-02 |
Jan-03 |
Feb-03 |
Mar-03 |
Apr-03 |
Price ($ per Mcf) |
3.59 |
3.84 |
4.47 |
5.45 |
6.69 |
4.71 |
Price ($ per MMBtu) |
3.50 |
3.74 |
4.36 |
5.31 |
6.53 |
4.59 |
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 May 16 was 990 Bcf,
which is 34.9 percent below the 5-year average inventory level for the
comparable reporting week, according to EIA's Weekly Natural Gas Storage
Report. (See
Storage Figure). The
implied net injection was the largest of this year's refill season at 90 Bcf,
which is also about 32 percent more than was injected last year. The 5-year
average injection for the week is 79 Bcf. On a regional basis, the implied net
change departed most from the average in the Consuming East, where 58 Bcf was
injected, which is 21 percent more than the 5-year average for the week in the
region. Warmer-than-normal temperatures prevailed through most of the country
for the week ending May 17, likely increasing demand for power generation in
certain regions. According to the National Weather Service, cooling degree days
(CDDs) numbered nearly 50 percent more in the West South Central (See Temperature Map) (See Deviation Map).
Although the refill season started off slowly with two weeks of net withdrawals
in April, over the past three weeks injections have averaged nearly 12 Bcf per
day, which is nearly 3 Bcf per day greater than the pace last year during the
same period.
Current Stocks 5/16/03 |
Estimated Prior 5-Year (1998-2002)
Average |
Percent Difference from 5 Year Average |
Implied Net Change from Last Week |
One-Week Prior Stocks 5/9/03 |
||
East Region |
496 |
784 |
-36.7% |
58 |
438 |
|
West Region |
206 |
215 |
-4.2% |
8 |
198 |
|
Producing Region |
288 |
521 |
-44.7% |
24 |
264 |
|
Total Lower 48 |
990 |
1,520 |
-34.9% |
90 |
900 |
|
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:
NOAA Forecasts Active
Hurricane Season: In its seasonal outlook
released on Monday, May 19, the National Oceanic and Atmospheric Administration
(NOAA) projected that this year's hurricane season (traditionally, June through
November) has a 55 percent chance of exceeding normal levels of activity, and
only a 10 percent chance for a below-normal season such as last year. The average Atlantic hurricane season brings
10 named tropical storms, with 6 reaching hurricane strength and 2 of those
classified as "major (i.e., category three (winds 111-130 miles per hour) or
higher)." NOAA's outlook sees the
potential for 11 to 15 tropical storms and 6 to 9 hurricanes, with 2 to 4
reaching the "major" classification. Last year there were 12 named tropical storms, but only 4 hurricanes,
only 2 of which became major storms. However, as far as the natural gas industry is concerned, last year was
a fairly active year as 6 named storms, including 2 hurricanes, roamed through
the Gulf of Mexico.
DOE-Sponsored Research on
LNG Delivery Shows Promise: A proposal by a small Texas
production company that contemplates combining LNG and salt cavern storage
technologies impressed the Department of Energy's National Energy Technology
Laboratory enough to garner $1.5 million for its designers to proceed to
feasibility testing for commercial application. The idea involves delivering LNG to salt cavern storage
facilities, where it would be gasified, pressurized, and injected into the salt
caverns, thus eliminating the need for LNG storage tanks and their associated
regasification infrastructure. If
successful, this new methodology could vastly reduce the cost of the necessary
LNG infrastructure with respect to a traditional LNG facility, while also
having much greater deliverability than a traditional LNG facility. The idea's
developer contends that, for example, a salt cavern costing $10 million to
develop will hold as much gas as a $60 million LNG tank, and can deliver gas at
six times the send out rate of a typical LNG tank facility. According to the idea's proponent, LNG
tankers would discharge their cargoes of LNG the same way as at existing
terminals. However, the new process
would simultaneously gasify and pressurize the LNG at the receiving point for
direct injection into the salt cavern storage facility.
Summary:
Natural gas spot and futures
prices dipped as moderate weather dominated much of the country. Natural gas in
storage as of Friday, May 16, increased to 990 Bcf, which implies a net
injection of 90 Bcf from the previous Friday, a pace of nearly 12.9 Bcf of
daily injections. Still, spot prices remain at elevated levels near $6 per
MMBtu at many production-area trading locations. NYMEX futures prices also
indicate higher prices this summer as the June contract closed at $6.198 per
MMBtu on Wednesday, May 21.