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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 wellhead prices will average $4.50 per MMBtu for the third quarter (JulyĖSeptember) of 2003 (Short-Term Energy Outlook, August 2003), or about 10 cents less than had been estimated in last monthís report. Relatively mild temperatures across much of the country in recent weeks have depressed natural gas spot prices and allowed record storage refill rates. Spot prices at the Henry Hub, which had hovered considerably above $5 per MMBtu on a monthly basis since the beginning of the year, fell below $4.70 per MMBtu during the last week in July.Only two months ago, Henry Hub spot prices topped $6 per MMBtu. With the reduced cooling demand this summer, record volumes of natural gas have been injected into underground storage facilities. As of August 8, working gas levels were 8.5 percent below the 5-year average, while just two months earlier (June 6), inventories were 25 percent less than the 5-year average. Assuming normal weather and taking into account the recent accelerated buildup in storage, monthly wellhead prices are expected to range between $4.24 and $4.74 per MMBtu through the end of 2003. Overall in 2003, however, wellhead prices are projected to average almost $2.00 more than the 2002 annual average, or about $4.81 per MMBtu. In 2004, assuming normal weather, prices are projected to drop by about 16 percent as the overall supply situation improves.

Natural gas production is expected to increase by about 3 percent in 2003.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 averaged 924 in July and totaled 930 during the first week in August. In 2004, production is expected to remain at modestly improved levels.

Natural gas demand is expected to rise by 0.6 percent in 2003 mainly because of the high weather-related demand during the first quarter of 2003.Demand for natural gas this summer is expected to be 1.7 percent less than 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 15 percent less than last summerís levels. In 2004, demand is expected to increase slightly as decreased consumption in the residential sector, assuming normal weather, is offset by higher demand in the industrial sector in response to somewhat lower prices and higher industrial output.

 

Short-Term Natural Gas Market Outlook, August 2003 

 

History

Projections

 

May-03

Jun-03

Jul-03

Aug-03

Sep-03

Oct-03

PRICES ($/MMBtu)

 

 

 

 

 

 

Average Wellhead Price

4.84

5.22

4.84

4.42

4.24

4.28

Residential Price

10.24

11.31

11.87

11.98

11.38

10.10

Electric Utilities Price

5.68

5.43

4.93

4.65

4.68

4.87

 

 

 

 

 

 

 

SUPPLY (Trillion Cubic Feet)

 

 

 

 

 

 

Total Dry Gas Production

1.648

1.607

1.668

1.673

1.613

1.670

Net Imports

0.282

0.282

0.307

0.321

0.301

0.303

††† Imports

0.340

0.337

0.365

0.379

0.359

0.363

††† Exports

0.058

0.055

0.058

0.059

0.058

0.059

Suppl. Gaseous Fuels

0.006

0.005

0.006

0.006

0.006

0.006

Total New Supply

1.936

1.895

1.981

2.000

1.920

1.979

 

 

 

 

 

 

 

Working Gas in Storage

 

 

 

 

 

 

††† Opening

0.803

1.217

1.704

2.103

2.433

2.812

††† Closing

1.217

1.704

2.103

2.433

2.812

3.037

Net Storage Withdrawal

-0.414

-0.487

-0.399

-0.330

-0.379

-0.225

 

 

 

 

 

 

 

Total Supply

1.523

1.407

1.582

1.670

1.541

1.754

 

 

 

 

 

 

 

Balancing Item

0.067

0.093

0.091

-0.057

-0.065

-0.221

 

 

 

 

 

 

 

Total Primary Supply

1.590

1.500

1.673

1.612

1.476

1.534

 

 

 

 

 

 

 

DEMAND (Trillion Cubic Feet)

 

 

 

 

 

 

Lease & Plant Fuel

0.083

0.080

0.082

0.080

0.075

0.077

Pipeline Use

0.043

0.043

0.051

0.052

0.046

0.048

Delivered to Consumers

1.464

1.377

1.540

1.480

1.355

1.409

††† Residential

0.248

0.145

0.111

0.102

0.118

0.205

††† Commercial

0.184

0.149

0.138

0.140

0.143

0.196

††† Industrial

0.572

0.554

0.576

0.576

0.544

0.588

††† Electric Power

0.460

0.529

0.715

0.662

0.550

0.420

Total Demand

1.590

1.500

1.673

1.612

1.476

1.534

 

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

 

 

 

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