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Natural Gas Weekly Update Archive

for week ending June 25, 2003  |  Release date:  June 26, 2003   |  Previous weeks

Overview:

Compared with Wednesday, June 18, natural gas spot prices were higher at all locations in the Lower 48 States in trading on June 25. For the week (Wednesday-Wednesday), prices at the Henry Hub increased 10 cents or about 2 percent to $5.64 per MMBtu. The price of the NYMEX futures contract for July delivery at the Henry Hub increased roughly 18 cents per MMBtu or 3 percent since last Wednesday to settle at $5.757 per MMBtu yesterday (June 25). Natural gas in storage increased to 1,565 Bcf as of Friday, June 20, which is about 19 percent below the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil increased $1.37 per barrel or roughly 5 percent since last Wednesday to trade yesterday at $31.65 per barrel or $5.46 per MMBtu.

 


 


Prices:

Price decreases of up to 35 cents per MMBtu at many market locations since Tuesday, June 24, partially offset the price hikes that occurred in the preceding days. Nevertheless, prices have increased at most market locations since last Wednesday, June 18, climbing as much as 54 cents. Contributing factors to the surge in prices likely include warmer-than-normal temperatures in most of the Lower 48 States driving cooling demand, continuing large injections to working gas in storage, and rising crude oil prices. Since Wednesday, June 18, price increases of up to 20 cents prevailed throughout most of the country, including the Midcontinent, Midwest, Louisiana, Texas, and California. The Northeast region had even larger increases as prices gained 23 to 54 cents per MMBtu at many market locations. In contrast to the nationwide pattern of rising prices, prices in the Rocky Mountains region fell between 16 and 23 cents at most locations. Averaging roughly $4.50 to 4.98 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 65 percent greater than last year's level on average.

 

Spot Prices ($ per MMBtu)

Thur.

Fri.

Mon.

Tues.

Wed.

19-Jun

20-Jun

23-Jun

24-Jun

25-Jun

Henry Hub

5.53

5.67

5.87

5.85

5.64

New York

5.81

6.05

6.65

6.62

6.40

Chicago

5.52

5.69

5.93

5.92

5.65

Cal. Comp. Avg,*

5.09

5.04

5.36

5.34

5.35

Futures ($/MMBtu)

 

 

 

 

 

Jul delivery

5.941

5.805

5.863

5.697

5.757

Aug delivery

6.027

5.902

5.939

5.778

5.835

*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 July delivery at the Henry Hub gained about 36 cents per MMBtu since Wednesday, June 18, to settle at $5.757 per MMBtu on Wednesday, June 25. The basis differential between the Henry Hub spot price and futures prices shows a pattern of increase for each successive month remaining in 2003, which provides incentives to inject natural gas in storage. Specifically, in trading yesterday (June 25), the August 2003 contract exceeded the Henry Hub spot price by 20 cents per MMBtu, and the January 2003 contract exceeded the spot price by 63 cents. The July 2003 contract is set to expire today, June 26, 2003.

 

Estimated Average Wellhead Prices

 

Dec-02

Jan-03

Feb-03

Mar-03

Apr-03

May-03

Price ($ per Mcf)

3.84

4.47

5.45

6.69

4.71

4.97

Price ($ per MMBtu)

3.74

4.36

5.31

6.53

4.59

4.85

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.

 

Storage:

Working gas in storage was 1,565 Bcf as of Friday, June 20, 2003, according to the EIA Weekly Natural Gas Storage Report. This is roughly 19 percent below the 5-year average for the report week, and more than 29 percent below the level last year for the same week (See Storage Figure). The implied net injection during the week of June 20 was 127 Bcf, which is about 49 percent more than the 5-year average injection of 85 Bcf for the week. This is the fourth consecutive triple-digit injection of the refill season, and the largest net addition recorded in the 9-year history of the EIA Weekly Natural Gas Storage Report database. Over the last 6 weeks, net additions into storage totaled 665 Bcf or 111 Bcf per week. Cooler-than-normal temperatures throughout most of the Lower 48 States mitigated cooling demand for natural gas and facilitated the robust level of net injections (See Temperature Map) (See Deviation Map). The year-on-year storage deficit has declined for the tenth week in a row, falling 32 Bcf to 653 Bcf.

 

All Volumes in Bcf

Current Stocks 6/20/03

Estimated Prior 5-Year (1998-2002) Average

Percent Difference from 5 Year Average

Implied Net Change from Last Week

One-Week Prior Stocks 6/13/03

East Region

847

1,054

-19.6%

78

769

West Region

265

266

-0.4%

11

254

Producing Region

453

615

-26.3%

38

415

Total Lower 48

1,565

1,935

-19.1%

127

1,438

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:

Energy Efficiency Improves for Natural Gas Appliances: The average consumption of natural gas by households declined by 6 percent between 1997 and 2001, continuing a trend of more efficient natural gas appliances, according to a recent study by the American Gas Association (AGA). The study, Patterns in Residential Natural Gas Consumption: 1997-2001, found that a combination of factors, including more efficient natural gas furnaces and boilers, has enabled homeowners to use less natural gas,. In 1997, the average home had a gas furnace or boiler with a fuel use efficiency of 74 percent. The average efficiency of the boiler in 2001 had risen to 77 percent and to 86 percent for boilers in newly-built homes the study found. The AGA also said that "tighter, more efficient" homes and a slight reduction in the number of appliances also played a role in the decline in household gas consumption. In 1997, the average homeowner used about 89,000 cubic feet of gas. That has since decreased to 83,000 cubic feet in 2001, according to the study. Meanwhile, the number of households using natural gas increased from 54.9 million in 1997 to 59.7 million in 2001. The analysis of energy-efficiency trends through 2001 is an update of an earlier study, which found that there was a 16-percent efficiency gain in natural gas applications between 1980 and 1997.

 

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. Working gas in storage increased 127 Bcf, which is 49 percent greater than the 5-year average, and the largest net addition recorded in the 9-year history of the EIA Weekly Natural Gas Storage Report database.

Natural Gas Summary from the Short-Term Energy Outlook