for week ending June 4, 2003 | Release date: June 5, 2003 | Previous weeks
Compared with Wednesday, May 28, natural gas spot
prices were higher at all locations in the Lower 48 States in trading on June
4. For the week (Wednesday-Wednesday), prices
at the Henry Hub increased 70 cents or about 12 percent to $6.41 per MMBtu. The
price of the NYMEX futures contract for July delivery at the Henry Hub
increased roughly 36 cents per MMBtu or 5 percent since last Wednesday to
settle at $6.375 per MMBtu yesterday (June 4). Natural gas in storage increased to 1,199 Bcf as of Friday, May 30,
which is about 29 percent below the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil
increased $1.325 per barrel or roughly 5 percent since last Wednesday to trade
yesterday at $29.81 per barrel or $5.14 per MMBtu.
Prices have increased at
all market locations since last Wednesday, May 28, with gains of more than 40
cents per MMBtu at nearly all locations. Contributing factors to the surge in prices likely include
cooler-than-normal temperatures in the Northeast driving heating demand,
warmer-than-normal temperatures in the Southeast, Southwest, Mountain and
Pacific regions driving cooling demand, continuing concerns about working gas
storage levels, and rising crude oil prices. Significant price gains were reported in the Northeast, Louisiana,
Texas, Mississippi and Alabama regions where prices climbed from 59 to 78 cents
per MMBtu. These increases returned
prices to levels prevalent late in the heating season this year. For example, prices at the Algonquin
citygate, which serves the New England region posted its highest price since
March 13, 2003, when prices averaged $7.46. At $6.88 per MMBtu, prices at the Algonquin citygate were the highest in
the Lower 48 States. Meanwhile, prices
in the Rocky Mountains region climbed between 40 and 56 cents at most
locations. Averaging roughly $5.09 to 5.40 per MMBtu, prices in the Rocky
Mountains region remain the lowest in the nation. Prices remain significantly higher than last year at this time at
all market locations, with prices about double last year's level on average.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
29-May |
30-May |
2-Jun |
3-Jun |
4-Jun |
|
Henry Hub |
5.76 |
5.98 |
6.21 |
6.25 |
6.41 |
New York |
6.09 |
6.34 |
6.61 |
6.64 |
6.82 |
Chicago |
5.76 |
5.93 |
6.15 |
6.18 |
6.34 |
Cal. Comp. Avg,* |
5.45 |
5.52 |
5.81 |
5.76 |
5.83 |
Futures ($/MMBtu) |
|
|
|
|
|
Jul delivery |
6.066 |
6.251 |
6.412 |
6.360 |
6.375 |
Aug delivery |
6.129 |
6.310 |
6.472 |
6.424 |
6.435 |
*Avg. of NGI's reported
avg. prices for: Malin, PG&E
citygate, |
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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 July
delivery at the Henry Hub gained about 36 cents per MMBtu since Wednesday, May
28, to settle at $6.375 per MMBtu on Wednesday, June 4. The basis differential
between the Henry Hub spot price and the futures contracts for delivery in each
month through the rest of the injection
season has converged with the spot price, which may reflect a tight natural gas
market. However, the futures prices for
delivery in December 2003 and January 2004 continue to exceed the spot price by
more than 25 cents per MMBtu, providing suppliers strong incentives to inject
gas into storage.
Estimated Average Wellhead Prices |
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|
Nov-02 |
Dec-02 |
Jan-03 |
Feb-03 |
Mar-03 |
Apr-03 |
Price ($ 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 was 1,199 Bcf as of Friday,
May 30, 2003, according to the EIA Weekly Natural Gas Storage Report. (See Storage Figure) This is
nearly 29 percent below the 5-year average for the report week, and over 39
percent below the level last year for the same week. The implied net injection during the week of May 30 was 114 Bcf, which
is roughly 28 percent higher than the 5-year average injection of 89 Bcf for
the week. This is the first
triple-digit injection of the refill season, and the largest net injection
recorded in the 9-year history of the EIA Weekly Natural Gas Storage Report
database. Net injections in the East
region were 70 Bcf, which is 25 percent greater than the 5-year average, while
net injections were 62 percent above the 5-year average of 21 Bcf in the
Producing region. In contrast, net
injections were 3 Bcf or 23 percent below the 5-year average in the West
region. Net storage additions were at
record highs despite cooler-than-normal temperatures in Middle Atlantic and New
England regions, which contributed to lingering heating demand for natural gas
(See Temperature Map) (See Deviation Map). Meanwhile, warmer-than-normal temperatures
in the Pacific and Rocky Mountains regions likely spurred cooling demand for
natural gas. The year-on-year storage deficit declined last week, falling 7 Bcf
to 755 Bcf. This is the sixth straight
week that the year-on-year storage deficit has declined
All Volumes
in Bcf |
Current
Stocks 5/30/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent Difference
from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 5/23/03 |
|
East Region |
629 |
889 |
-29.2% |
70 |
559 |
|
West Region |
226 |
236 |
-4.2% |
10 |
216 |
|
Producing
Region |
344 |
558 |
-38.4% |
34 |
310 |
|
Total Lower
48 |
1,199 |
1,683 |
-28.8% |
114 |
1,085 |
|
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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FERC Approves New Pipeline
Capacity in the Southwest and
Rockies: The Federal Energy Regulatory Commission (FERC) this week approved
two major natural gas pipeline projects, which will increase deliverability in
the Southwest and out of the Rockies. On Wednesday, June 4, El Paso Natural Gas
received approval for its "Power-Up" project, which will expand the capacity of
the pipeline system by 320 million cubic feet per day (MMcf/d). The $173
million expansion will allow El Paso to meet the needs of customers off its
Line 2000 segment, which is a recently converted oil pipeline that runs from
McCamey, TX, to Ehrenberg, AZ. The expansion will increase the overall capacity
of the Line 2000 segment to 550 MMcf/d, according to the FERC. Another major
pipeline project, the Grasslands Pipeline, also passed FERC scrutiny on Monday,
June 3. Grasslands will add 80,000 Mcf/d of deliverability out of the Powder
River Basin in Wyoming and Montana through the construction of 253 miles of
16-inch-diameter pipeline. Williston Basin Interstate Pipeline has proposed the
project to provide market access for the increasing coalbed methane production
in the region. The Grasslands Pipeline will interconnect in North Dakota with
Northern Border Pipeline, which extends to major Midwestern markets such as
Chicago.
Summary:
Continuing tightness in the
natural gas market contributed to rising prices at most locations across the
Lower 48 States, and at the NYMEX futures market. Net injections into storage were 114 Bcf, 28 percent greater than
the 5-year average, and the highest net injection recorded in the United States
in the 9-year history of the Weekly Natural Gas Storage Report.