for week ending August 27, 2003 | Release date: August 28, 2003 | Previous weeks
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.
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, |
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and Southern California
Border Avg. |
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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 $5.49 per MMBtu, fell just
under 24 cents on the week.
Estimated Average Wellhead Prices |
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|
Feb-03 |
Mar-03 |
Apr-03 |
May-03 |
Jun-03 |
Jul-03 |
Price ($ 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. |
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Source: Energy Information Administration, Office
of Oil and Gas. |
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. |
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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