for week ending August 6, 2003 | Release date: August 7, 2003 | Previous weeks
With little in the way of fundamental changes, spot
and futures prices showed modest gains for the week (Wednesday to Wednesday,
July 30-August 6). The Henry Hub spot
price gained a nickel on the week, ending trading yesterday (Wednesday, August
6) at $4.71 per MMBtu. On the NYMEX,
the near-month futures contract (for September delivery) settlement price
increased by $0.077 to $4.745 per MMBtu. The Energy Information Administration (EIA) reported that working gas
inventories were 2,106 Bcf as of Friday, August 1, which is 10 percent below
the 5-year (1998-2002) average for the week. Crude oil prices showed more upward movement, as a terrorist bombing in
Indonesia and continuing unsettled conditions in Iraq contributed to concerns
about oil supply as the market looks toward the upcoming winter. The spot price for West Texas Intermediate
(WTI) crude oil gained $1.08 per barrel, or 21 cents per MMBtu, on the week to
$31.77 per barrel ($5.48 per MMBtu) in yesterday's trading.
With only marginal changes
in temperature trends that have remained fairly constant this summer, featuring
hotter-than-normal temperatures in the desert southwest and cooler-than-normal
temperatures in the Midwest, Northeast, and parts of the South, spot prices at
most market locations could muster gains of only a dime or less for the week,
with slightly larger increases in the Northeast and California. Gulf Coast price increases were limited to 6
cents or less, with the Henry Hub gaining a nickel to $4.71 per MMBtu. The Chicago citygate price increased by 7
cents, to $4.73 per MMBtu, while increases at Northeast locations ranged from
pennies to 18 cents per MMBtu. The
TRANSCO Zone 6 spot price for New York delivery increased 17 cents, to $5.19
per MMBtu. The largest price increases
occurred in the Rockies, where maintenance at the Opal natural gas processing
plant curtailed supply by as much as 600 MMcf per day beginning Tuesday,
boosting prices in the region. For the
week, Rockies locations' prices increased from 14 to 34 cents per MMBtu. The resulting supply shortfall affected
related regional markets, such as West Texas locations, where price increases
for the week were a dime or more. Likewise, California markets were a bit tighter, with price increases
mostly 15 cents or more for the week. The Southern California Border Average price and the PG&E citygate price
ended the week within a penny of each other, at $4.71 and $4.72 per MMBtu,
respectively.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
31-Jul |
1-Aug |
4-Aug |
5-Aug |
6-Aug |
|
Henry Hub |
4.63 |
4.70 |
4.82 |
4.71 |
4.74 |
New York |
5.03 |
5.05 |
5.24 |
5.19 |
5.21 |
Chicago |
4.67 |
4.72 |
4.85 |
4.73 |
4.78 |
Cal. Comp. Avg,* |
4.51 |
4.57 |
4.80 |
4.59 |
4.63 |
Futures ($/MMBtu) |
|
|
|
|
|
Sept delivery |
4.718 |
4.874 |
4.630 |
4.677 |
4.745 |
Oct delivery |
4.748 |
4.909 |
4.670 |
4.717 |
4.788 |
*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). |
As with cash prices,
futures prices experienced marginal gains for the week, as increases for all
contracts for delivery in months through March 2004 were below 10 cents per
MMBtu. The small week-to-week changes
obscure the highly volatile trading sessions of Friday and Monday, during which
the September contract rose by nearly 16 cents to end the trading week, then
fell by nearly a quarter the following Monday. The increase was attributed to traders covering short positions and the
existence of a couple of eastward-moving tropical waves in the western Atlantic
that showed potential for upgrading. Monday's large price drop was likely a reaction to the dissipation of
storm threats, plus continued forecasts for mild temperatures in most major
gas-consuming regions. The September
contract's settlement price of $4.630 per MMBtu on Monday was the lowest for a
near-month contract in 8 months. Small
gains on Tuesday and Wednesday pushed September's price up to $4.745 per
MMBtu. As of yesterday's trading, the highest-priced
gas through the next heating season was for January delivery, at $5.398 per
MMBtu.
Estimated Average Wellhead Prices |
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|
Feb-03 |
Mar-03 |
Apr-03 |
May-03 |
Jun-03 |
Jul-03 |
Price ($ per Mcf) |
5.45 |
6.69 |
4.71 |
4.97 |
5.35 |
4.91 |
Price ($ per MMBtu) |
5.31 |
6.52 |
4.59 |
4.84 |
5.21 |
4.79 |
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 increased to 2,106 Bcf as of
Friday, August 1, which is 234 Bcf, or 10 percent, below the 5-year (1998-2002)
average (See
Storage Figure). At
74 Bcf, the implied net change in stocks is 45 percent greater than the 5-year
average and over twice the amount of net additions for the same week last year,
although it is the lowest weekly inventory build since the week ended May
9. Stocks in the East region narrowed
the gap from the 5-year average to under 10 percent for the first time since
January 17, 2003. Factors contributing
to the strong additions to storage include the price differential between spot
and futures prices and the weather. The
average differential between the Henry Hub spot price and prices for delivery
in December 2003 through February 2004 was roughly 57 cents for the 5 trading
days prior to August 1, which provides a strong incentive to inject gas into
storage. Overall temperature trends within the 9 Census Divisions comprising
the lower 48 states were little changed during the report week, showing
continued below normal temperatures in major gas consuming regions in the
eastern United States (See
Temperature Map.) (See Deviation Map)
All Volumes
in Bcf |
Current
Stocks 8/1/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 7/25/03 |
|
East Region |
1,218 |
1,344 |
-9.4% |
58 |
1,160 |
|
West Region |
304 |
311 |
-2.3% |
4 |
300 |
|
Producing
Region |
584 |
685 |
-14.7% |
12 |
572 |
|
Total Lower
48 |
2,106 |
2,340 |
-10.0% |
74 |
2,032 |
|
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 Staff
Finds No Manipulation in February Price Spike: An investigation into record high prices
across the country in February 2003 revealed no evidence of market
manipulation, according to a Federal Energy Regulatory Commission (FERC) report
released in late July. After performing an analysis of a large sample of gas
transactions and interviewing market participants, FERC staff said that prices
across the country rose in apparent response to supply and demand conditions.
Staff also noted that markets at the time consisted of few buyers and sellers,
perhaps limiting liquidity and efficiency in the market. Prices for next-day
delivery roughly tripled in less than a week during late February. The Henry
Hub price rose from $6.74 per MMBtu on February 21 to $18.85 by February 25,
according to prices reported in NGI's Daily Gas Price Index (published
by Intelligence Press). At the national level, natural gas markets were under
great stress during the period due to a severe cold front across much of the
eastern half of the country. The cold front penetrated producing areas in the
Midcontinent, temporarily reducing supplies. Lastly, the front came at the end
of an unusually cold winter that had depleted storage levels to the low end of
the 5-year range at the time. During the study period, prices in the Midwest
and Northeast were particularly high because of physical delivery limitations,
staff said, noting numerous operational flow orders issued by interstate
pipeline and storage operators.
Summary:
In the absence of
significant changes to either supply or demand, spot and futures prices showed
only modest gains for the week. Working
gas inventories continued to increase at a higher-than-average pace, reaching
2,106 Bcf as of Friday, August 1.