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Natural Gas Weekly Update Archive

for week ending August 27, 2003  |  Release date:  August 28, 2003   |  Previous weeks

Overview:

Natural gas spot prices in most market areas rose slightly in the past week (Wednesday, August 20-Wednesday, August 27), supported by seasonal hot weather throughout much of the country and the risk of lost production due to tropical storm activity. Increases were generally less than a dime in most areas. At the Henry Hub, the spot price increased 9 cents per MMBtu on the week to trade yesterday (Wednesday, August 27) at $5.12. At the NYMEX, the September contract expired yesterday at $4.927 per MMBtu, down just over 11 cents on the day and a little more than 19 cents since last Wednesday. The EIA reported that working gas in storage was 2,319 Bcf as of Friday, August 22, which is 7.5 percent below the 5-year (1998-2002) average for the week. The price of West Texas Intermediate (WTI) crude oil increased to $31.08 per barrel, or $5.36 per MMBtu, only a slight change of 12 cents per barrel on the week.

 


 

 


Prices:

Spot natural gas traded in narrow price bands at most market areas this week with little apparent change in the fundamental supply and demand picture. Tropical Depression 9 showed up in the Caribbean late last week, boosting prices temporarily, but quickly dissolved before posing any real threat to production. Seasonal hot weather in the Midwest, Northeast, and Southwest also provided temporary strength to prices early this week, but prices then eased following forecasts that temperatures will fall in the eastern half of the country this weekend. The Henry Hub price yesterday (August 27) moved up 3 cents to $5.12 per MMBtu, which is 9 cents higher than the average price last Wednesday (August 20). Trading at Midcontinent pricing points resulted in slight increases of a nickel or less for a regional price average of $5.05 per MMBtu, as Chicago and other Midwest market locations experienced temperatures in the 90s early this week. As heat arrived in the Northeast early in the week, the price at New York citygates off Transcontinental Gas Pipe Line traded as high as $5.70, but by yesterday the price had settled to $5.56 per MMBtu, or unchanged from last Wednesday, owing to mild weather arriving in the region.

 

Spot Prices ($ per MMBtu)

Thur.

Fri.

Mon.

Tues.

Wed.

21-Aug

22-Aug

25-Aug

26-Aug

27-Aug

Henry Hub

5.14

5.24

5.28

5.09

5.12

New York

5.59

5.58

5.70

5.59

5.56

Chicago

5.22

5.33

5.38

5.22

5.20

Cal. Comp. Avg,*

4.98

5.01

5.04

4.91

4.92

Futures ($/MMBtu)

 

 

 

 

 

Sept delivery

5.275

5.280

5.083

5.038

4.927

Oct delivery

5.305

5.335

5.131

5.076

4.883

*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 futures contract for September delivery expired yesterday at $4.927 per MMBtu. Despite a decline in value of 19 cents per MMBtu since last Wednesday, the September contract gained nearly 6 percent, or 26 cents, during its tenure as the near-month contract. The October contract takes over as the near-month contract today having settled yesterday at $4.883 per MMBtu after a decline of a little over 19 cents on the day and almost 27 cents since last Wednesday. Nonetheless, the October contract is currently priced about 32 percent higher than the expiry price of the October 2002 contract ($3.686). The January 2004 contract, which is the highest priced contract in the 12-month strip at a little under $5.49 per MMBtu, fell just under 24 cents on the week.

 

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.

 

Storage:

Working gas in storage totaled 2,319 Bcf as of Friday, August 22, according to the EIA Weekly Natural Gas Storage Report. Working gas inventories are roughly 7.5 percent below the 5-year average for the report week, and about 15 percent below the level last year for the same week (See Storage Figure). The implied net injection during the week ending August 22 was 53 Bcf, which is the lowest net injection reported since April 25. However, the net injection fell just slightly below the 5-year average of 58 Bcf for the report week and last year’s estimated net injection for the week of 59 Bcf. The falloff in net additions to underground storage was driven, at least in part, by higher temperatures. During the report week, the weather for the country as a whole was about 25 percent warmer than normal, as measured by cooling degree days (CDDs) for the week ending August 23, according to the National Weather Service (See Temperature Map.) (See Deviation Map). Moreover, key markets for cooling demand were considerably warmer than normal. In the East North Central, including Chicago and other major population centers, CDDs were 46 percent above normal. In the Middle Atlantic region, CDDs were about 35 percent above normal.

 

All Volumes in Bcf

Current Stocks 8/22/03

Estimated Prior 5-Year (1998-2002) Average

Percent Difference from 5 Year Average

Implied Net Change from Last Week

One-Week Prior Stocks 8/15/03

East Region

1,364

1,477

-7.7%

37

1,327

West Region

324

326

-0.6%

5

319

Producing Region

631

703

-10.2%

11

620

Total Lower 48

2,319

2,506

-7.5%

53

2,266

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 Market Trends:

EIA Issues Statement Concerning the Weekly Natural Gas Storage Report: The Energy Information Administration (EIA) released a statement today (August 28) in response to several recent press reports that EIA has changed the way it estimates the amount of natural gas in storage each week. In fact, EIA has not made any recent changes to its estimation process. EIA is examining possible enhancements to the Weekly Natural Gas Storage Report (WNGSR) system, but this examination occurs regularly and on an ongoing basis. No future changes have been decided upon or scheduled. Moreover, before EIA would introduce any changes to the WNGSR, those changes would first be publicly announced.

 

LNG Facilities Advance in U.S. and Mexico: Proposals to build liquefied natural gas (LNG) facilities passed milestones in the regulatory approval processes in the United States and Mexico. The U.S. Federal Energy Regulatory Commission (FERC) issued a favorable final environmental impact statement for Sempra Energy’s proposed Cameron LNG facility in Hackberry, Louisiana, while Mexico’s Comision Reguladora de Energia (CRE) issued key permits to projects in Baja California. The favorable environmental issuance for the Cameron LNG is the first in more than 20 years for a new LNG facility in the United States. Sempra still requires final authorization for the project, which would be located near Hackberry, Louisiana, on the Calcasieu River. The $700 million facility would have regasification capacity of 1.5 Bcf a day. The CRE meanwhile granted permits to Royal Dutch/Shell and Sempra for construction of LNG plants in Baja California for supply in Northern Mexico and Southern California. The companies have targeted sites near Ensenada for the construction of the facilities, both of which have planned start-up dates in 2007. The terminals separately would provide 1 Bcf a day of regasification capacity. Marathon Oil has already received a permit from the CRE for its proposed Tijuana Regional Energy Center, which includes an LNG terminal and a power plant, in Baja California. Two other LNG projects have been proposed by ChevronTexaco and ConocoPhillips for the region.

 

Summary:

Spot prices generally increased a slight $0.05 to $0.10 per MMBtu this week, with supply and demand fundamentals showing little change. At the NYMEX, the September contract expired at $4.927 per MMBtu following price decreases in three consecutive trading sessions. Storage levels reached 2,319 Bcf as of Friday, August 22, implying a net injection of 53 Bcf, which is the lowest net injection of the summer.

 

Natural Gas Summary from the Short-Term Energy Outlook