for week ending August 20, 2003 | Release date: August 21, 2003 | Previous weeks
Despite rising temperatures in many regions of the
country that helped push prices upward over the past 3 days, spot prices
nonetheless ended trading yesterday (Wednesday, August 20) down for the most
part from levels of the previous Wednesday (August 13). At the Henry Hub, the spot price fell by 14
cents per MMBtu on the week, ending trading yesterday at $5.03. Likewise on the NYMEX, the settlement price
for the futures contract for September delivery ended the week down 6 cents per
MMBtu from the previous week, when it finished trading yesterday at
$5.119. The EIA reported that working
gas in storage increased to 2,266 Bcf as of Friday, August 15, which is 7.4
percent below the 5-year (1998-2002) average for the week. West Texas Intermediate (WTI) crude oil on
the spot market changed little during the week ending the week up 11 cents per
barrel at $30.96, or $5.34 per MMBtu.
The overriding story on
prices for the week was that the upward pressure from rising temperatures could
not overcome the large drop in spot prices last Friday. On that day, spot prices fell by 30 to over
50 cents per MMBtu at nearly every market location, mirroring the sharp decline
in futures prices of the day before. Regional average price drops mostly ranged from 31 to 37 cents per
MMBtu, bringing spot prices at most locations below $5 per MMBtu. Northeast prices dropped the most, with a
regional average drop of 45 cents, but managed to stay above $5, as did
selected points in the Midwest. As
Tropical Storm Erika moved through the Gulf of Mexico, it had very little
effect on either production or prices, as its path was too far south and its
winds were too weak to have much of an impact. On the other hand, substantially higher-than-normal temperatures over
the weekend, particularly in the Midcontinent and Midwest, coupled with the
continued outage or slow recovery of a number of nuclear electric generation
plants in the aftermath of the electrical blackout of Thursday and Friday
pushed prices upward strongly on Monday. Price increases ranged from about a nickel to 20 cents at most market
locations. Continued heat in the
Midwest and rising temperatures in the Northeast, coupled with a reduction in
supply on the Maritimes and Northeast pipeline owing to a compressor outage,
kept prices on the rise, albeit in smaller increments, on Tuesday and
Wednesday. However, by the end of
trading yesterday, spot prices were still below their levels of last Wednesday
at nearly all market locations, with the difference ranging from 7 to 20 cents
at most locations.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
14-Aug |
15-Aug |
18-Aug |
19-Aug |
20-Aug |
|
Henry Hub |
5.13 |
4.84 |
4.94 |
4.99 |
5.03 |
New York |
5.77 |
5.32 |
5.44 |
5.53 |
5.56 |
Chicago |
5.28 |
4.94 |
5.05 |
5.15 |
5.15 |
Cal. Comp. Avg,* |
5.15 |
4.78 |
4.88 |
4.93 |
4.92 |
Futures ($/MMBtu) |
|
|
|
|
|
Sept delivery |
4.891 |
4.848 |
4.883 |
4.964 |
5.119 |
Oct delivery |
4.926 |
4.891 |
4.918 |
4.992 |
5.150 |
*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). |
In the futures market, the
story was similar, as futures prices experienced their steepest one-day decline
in two months on Thursday, following a storage report showing a
higher-than-expected implied net injection of 82 Bcf. The contract for September delivery fell $0.288 per MMBtu to
$4.891, then fell by another 4 cents on Friday to end the week at $4.848 per
MMBtu. Futures prices have climbed each
of the past 3 trading days, getting some support from the warmer-than-normal
temperatures in some high-gas consuming areas and from near-term forecasts for
above-normal temperatures in much of the West, Midcontinent, Midwest, and in
most Gulf Coast states through the end of the month. Through Wednesday trading, the September contract gained a cumulative
$0.271 since Monday, settling at $5.119 per MMBtu. Futures prices for delivery in months through March 2004 all
settled above $5, with the highest price gas for future delivery over this
period as of yesterday being for January 2004, at $5.726 per MMBtu. Futures prices for December through February
2004 continue to show a significant premium to the Henry Hub spot price, which
continues to provide incentive for storage injections.
Estimated Average Wellhead Prices |
||||||
|
Feb-03 |
Mar-03 |
Apr-03 |
May-03 |
Jun-03 |
Jul-03 |
Price ($ 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 by 78 Bcf to 2,266 Bcf
as of Friday, August 15, further reducing the deficit from the 5-year
(1998-2002) average to 7.4 percent (See
Storage Figure). The deficit with respect to the 5-year average and last year's
inventory level dropped by 21 and 41 Bcf, respectively, to 182 and 391
Bcf. The implied net addition of 78 Bcf
for the week is nearly 37 percent greater than the 5-year average, while the
Producing region stock change is more than double its 5-year average. Temperature patterns during the report week
limited air-conditioning requirements in much of the South, Gulf Coast, and
Midcontinent, dampening swing demand for gas and likely contributing to the
strong injections, particularly in the Producing region. Temperatures averaged up to 5 degrees below
normal in the high gas-consuming West South Central census division, and were
similarly below normal in most of the East South Central and South Atlantic
divisions (See Temperature Map.)
(See Deviation Map) Cooling degree days for the
week ranged from over 2 percent to over 10 percent below normal in these
divisions.
All Volumes
in Bcf |
Current
Stocks 8/15/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 8/8/03 |
|
East Region |
1,327 |
1,431 |
-7.3% |
55 |
1,272 |
|
West Region |
319 |
321 |
-0.6% |
5 |
314 |
|
Producing
Region |
620 |
696 |
-10.9% |
18 |
602 |
|
Total Lower
48 |
2,266 |
2,448 |
-7.4% |
78 |
2,188 |
|
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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Other Market Trends:
Cove Point
Begins Receiving LNG Shipments. According
to Dominion, its Cove Point LNG facility received its first cargo on Wednesday,
August 20, as the tanker, Berge Boston, delivered about 2.9 billion cubic feet
(Bcf) imported by BP. On August 18,
Dominion Cove Point received clearance from the Federal Energy Regulatory
(FERC) to begin commercial operations at its liquefied natural gas (LNG)
facility in Maryland. The Cove Point
LNG facility was mothballed in 1980, and operated as an LNG storage facility
since 1995. Attempts at full
reactivation of the facility to resume marine imports of LNG were delayed most
recently by questions about the project's safety and overall readiness raised
by the United States Coast Guard (USCG) and FERC. Having gained the approval of the USCG late in 2002, the FERC
approval was the final remaining hurdle to commence commercial operations. Upon full activation, Dominion Cove Point
will have storage capacity of 5 Bcf and a daily send-out capacity of 1 Bcf. The
terminal connects, via its own pipeline, to the major Mid-Atlantic gas
transmission systems of Transcontinental Gas Pipeline, Columbia Gas Transmission,
and Dominion Transmission.
Summary:
Although spot and futures
prices trended up over the past 3 days as hot weather that lingered from the
weekend created higher demand in some major gas consuming areas, they remained
below their week-ago levels. Storage
levels continued to grow at a well-above normal pace, reaching 2,266 Bcf as of
Friday, August 15.
Natural Gas Summary from the
Short-Term Energy Outlook