for week ending May 28, 2003 | Release date: May 29, 2003 | Previous weeks
Spot and futures prices
trended down for the second consecutive week, as cool, rainy weather continued
to dominate much of the nation, with the few pockets of summer-like temperatures
generating swing demand and higher prices only in limited areas. At the Henry Hub, prices declined by nearly
6 percent for the week (Wednesday to Wednesday, May 22-29), falling 36 cents to
$5.71 per MMBtu. The NYMEX futures
contract for June delivery declined by $0.253 per MMBtu on the week, expiring
yesterday (Wednesday, May 28) at the closing price of $5.945 per MMBtu. The Energy Information Administration (EIA)
reported that natural gas inventories reached 1,085 Bcf as of Friday, May 23, which
is 31.9 percent below the 5-year average. The spot price for West Texas Intermediate crude oil declined by just
over $1 from the previous Wednesday (May 21), falling $1.05 per barrel to
$28.46, or $4.91 per MMBtu.
The holiday-shortened trading week with little in
the way of weather-driven swing demand prompted acceleration in the decline of
cash prices from the week before. Cash
price declines were largest on Friday and Wednesday. Prices fell by the largest amounts on Friday, when decreases
occurred across the board, mostly in a 15 to 30-cent range, as markets
anticipated the inevitable slackening of demand for the impending holiday
weekend. Even the resumption of the
normal workweek on Tuesday brought only isolated, and mostly small, price
increases in some regions, while Wednesday's trading saw another drop in the
range of 10 to 20 cents per MMBtu at most locations. Exceptions were seen at isolated points in the Rockies, where
much larger price declines on Friday and large increases on Tuesday were driven
by maintenance-related transportation constraints that were removed over the
weekend. For the week, price declines
averaged around 35 cents or a few pennies more in most regional markets. Only in the Northeast did the regional
average price in yesterday's trading exceed $6, at $6.10 per MMBtu. The Midwest average fell 35 cents from the
previous Friday, to $5.91 per MMBtu, while the average of California locations
fell 20 cents, to $5.47.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
22-May |
23-May |
26-May |
27-May |
28-May |
|
Henry Hub |
6.09 |
5.91 |
5.91 |
5.84 |
5.71 |
New York |
6.55 |
6.33 |
6.33 |
6.31 |
6.13 |
Chicago |
6.06 |
5.87 |
5.87 |
5.86 |
5.72 |
Cal. Comp. Avg,* |
5.71 |
5.43 |
5.43 |
5.52 |
5.47 |
Futures ($/MMBtu) |
|
|
|
|
|
Jun delivery |
6.035 |
6.119 |
holiday |
5.900 |
5.945 |
Jul delivery |
6.143 |
6.226 |
holiday |
6.011 |
6.016 |
*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). |
On the NYMEX, the expiring near-month contract (June
delivery) closed out trading at $5.945 per MMBtu, managing a modest increase of
$0.045 per MMBtu after dropping by nearly 22 cents in the previous day's
trading. The large price drops of last
Thursday (May 22) and this Tuesday—with Tuesday's decline likely driven in part
by forecasts by both the National Weather Service and a private weather service
for a continuation of the unseasonably cool weather over much of the
nation—sent the June contract price below $6 for good. Nonetheless, since becoming the near-month
contract on April 29, the June contract gained nearly 14 percent. For the week, in addition to the June
contract's cumulative decline of $0.253 per MMBtu, out-month contracts for
delivery through March 2004 also showed declines, ranging from 9 to more than
28 cents per MMBtu. Nevertheless, as of
yesterday, the first future month with sub-$6 gas was March 2004, at a price of
$5.970 per MMBtu.
Estimated Average Wellhead Prices |
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|
Nov-02 |
Dec-02 |
Jan-03 |
Feb-03 |
Mar-03 |
Apr-03 |
Price ($ 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. |
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Source: Energy Information Administration, Office
of Oil and Gas. |
Working gas in storage rose above 1,000 Bcf for the first
time since late February, reaching 1,085 Bcf as of May 23, according to EIA's Weekly
Natural Gas Storage Report, standing at just under 32 percent below the
5-year average. (See Storage Figure) The implied
net injection of 95 Bcf was the largest thus far in the 8-week old refill
season, surpassing the 90 Bcf injection of the prior week. The regional net
inventory changes for the report week ranged from 25 to 37.5 percent greater than
the preceding 5-year (1998-2002) average for the comparable week, with the
stock build at the national level exceeding the 5-year average of 73 Bcf by 30
percent. Moderate temperatures were
prevalent for much of the nation during the report week, keeping natural gas
demand for either space heating or cooling in check (See Temperature Map). While cooler-than-average temperatures
prevailed over most of the nation west of the Rockies and north of the Gulf
coast (See Deviation Map),
gas customer-weighted heating degree-days for the region were lower than normal
except in the New England and Middle Atlantic Census Divisions. And even though
high temperatures reached into the 90s and beyond in Florida, Texas, and parts
of the Mountain and Pacific Census Divisions on some days, cooling degree-days
for the week in these areas, while higher than normal, were only about
one-quarter to one-half of the level for a typical mid-summer week.
All Volumes
in Bcf |
Current
Stocks 5/23/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 5/16/03 |
|
East Region |
559 |
833 |
-32.9% |
63 |
496 |
|
West Region |
216 |
223 |
-3.1% |
10 |
206 |
|
Producing
Region |
310 |
537 |
-42.3% |
22 |
288 |
|
Total Lower
48 |
1,085 |
1,593 |
-31.9% |
95 |
990 |
|
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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Natural Gas Rig Counts: The number of rigs drilling
for natural gas climbed by 14 to 882 for the week ending May 23, according to
Baker-Hughes Incorporated. This is the highest rig count since the week ended
October 19, 2001. The number of natural gas rigs is over 21 percent greater
than last year at this time, and nearly 31 percent above the 5-year average for
the report week. The rig count has
climbed nearly 25 percent in 2003, contrasting with last year's decline of
nearly 3 percent for the same 21-week period. The share of rigs drilling for
natural gas was 84 percent for the report week, remaining consistently above 80
percent since May 2001. This is the
longest period of time in the 15 years that Baker-Hughes has separately
reported gas and oil drilling rigs that rigs drilling for natural gas have
comprised more than 80 percent of total rigs drilling. The emphasis on gas prospects reflects a
relative advantage in the economics of natural gas prospects compared with
domestic crude oil prospects.
Summary:
Spot and futures prices
declined for a second consecutive week as moderate temperatures continued in
most areas outside of Florida, Texas, and the desert Southwest, limiting demand
for both space heating and cooling requirements. A larger-than-average net stock change brought natural gas
storage levels to 1,085 Bcf as of May 23.