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Natural Gas Summary from the Short-Term Energy Outlook
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Natural Gas Summary from the Short-Term Energy Outlook

   

 

 

Natural Gas Summary from the Short-Term Energy Outlook:

 

EIA projects that natural gas prices will remain relatively high through the rest of 2003, with monthly wellhead prices ranging between $4.31 and $4.96 per MMBtu (Short-Term Energy Outlook, July 2003). The spot price at the Henry Hub has been above $5.00 per MMBtu on a monthly basis since the beginning of the year. The price topped $6.00 in late May and early June, as concerns escalated about the ability of the industry to rebuild underground storage supplies.However, natural gas storage injections were about 40 percent above normal in June, posting a record increase of 487 Bcf for the month according to STEO estimates. As of July 4, working gas stocks were 1,773 Bcf or 15 percent less than the 5-year average. A month earlier, working gas stocks were about 26 percent below the 5-year average. Despite the improvement in the storage situation, above average prices and strong gas-directed drilling efforts will be needed to attain sufficient inventory levels by the beginning of the heating season. Overall in 2003, wellhead prices are projected to show an increase of about $2.00 per MMBtu (the largest U.S. annual wellhead price increase on record) over the 2002 price, pushing the average for the year to about $4.85 per MMBtu.In 2004, prices are projected to drop by 13 percent as the overall supply situation improves slightly, assuming normal weather.

 

Natural gas production is expected to increase by 3 percent in 2003 and hold at improved levels in 2004. High natural gas prices and sharply higher oil and natural gas field revenues are driving the resurgence in gas-directed drilling activity this year following the downturn in 2002.The number of rigs drilling for natural gas surpassed 900 in June and totaled 925 in the first week of July.On the imports side, natural gas imports from Canada were down slightly on a year-to-year basis for the first quarter of 2003, but imports of liquefied natural gas (LNG) totaled 75 Bcf in the first 3 months of 2003 compared with 26 Bcf for the same period in 2002.While expanded LNG imports could conservatively add about 140 Bcf of additional supply in 2003, total LNG volumes are still likely to contribute less than 10 percent to total natural gas imports into the United States.

 

Natural gas demand is expected to remain flat in 2003 compared with the 2002 level, despite the high weather-related demand during the first quarter of 2003.Demand for natural gas this summer is expected to fall by more than 3 percent from last summerís level, because of the effect of higher prices on the industrial and electricity-generating sectors.Also, assuming normal weather, cooling degree-days for the season (Q2 2003 and Q3 2003) will be about 12 percent less than last summerís levels. In 2004, demand is expected to increase by about 1 percent from the 2003 level, mainly because of somewhat weaker prices and higher demand in the electric power sector.

 

Short-Term Natural Gas Market Outlook, July 2003 

 

History

Projections

 

Apr-03

May-03

Jun-03

Jul-03

Aug-03

Sep-03

PRICES ($/MMBtu)

 

 

 

 

 

 

Average Wellhead Price

4.59

4.84

5.05

4.96

4.55

4.31

Residential Price

8.52

9.46

10.57

11.24

11.55

11.13

Electric Utilities Price

6.87

6.01

6.28

6.00

5.50

5.20

 

 

 

 

 

 

 

SUPPLY (Trillion Cubic Feet)

 

 

 

 

 

 

Total Dry Gas Production

1.625

1.672

1.623

1.681

1.673

1.602

Net Imports

0.275

0.281

0.287

0.307

0.308

0.284

††† Imports

0.334

0.341

0.345

0.367

0.368

0.342

††† Exports

0.059

0.061

0.058

0.059

0.060

0.058

Suppl. Gaseous Fuels

0.006

0.006

0.005

0.006

0.006

0.006

Total New Supply

1.906

1.958

1.915

1.994

1.987

1.892

 

 

 

 

 

 

 

Working Gas in Storage

 

 

 

 

 

 

††† Opening

0.676

0.803

1.217

1.704

2.128

2.492

††† Closing

0.803

1.217

1.704

2.128

2.492

2.851

Net Storage Withdrawal

-0.127

-0.414

-0.487

-0.424

-0.365

-0.358

 

 

 

 

 

 

 

Total Supply

1.779

1.545

1.427

1.571

1.622

1.534

 

 

 

 

 

 

 

Balancing Item

0.014

0.032

0.062

0.015

-0.035

-0.082

 

 

 

 

 

 

 

Total Primary Supply

1.793

1.577

1.490

1.586

1.587

1.452

 

 

 

 

 

 

 

DEMAND (Trillion Cubic Feet)

 

 

 

 

 

 

Lease & Plant Fuel

0.088

0.090

0.087

0.089

0.089

0.085

Pipeline Use

0.056

0.047

0.042

0.044

0.045

0.041

Delivered to Consumers

1.649

1.440

1.361

1.453

1.453

1.326

††† Residential

0.412

0.250

0.148

0.115

0.103

0.120

††† Commercial

0.268

0.182

0.136

0.128

0.130

0.134

††† Industrial

0.608

0.571

0.541

0.564

0.579

0.559

††† Electric Power

0.361

0.438

0.536

0.646

0.640

0.513

Total Demand

1.793

1.577

1.490

1.586

1.587

1.452

 

Source:Energy Information Administration, Short-Term Energy Outlook, July 2003.

 

 

 

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