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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: EIA projects that natural gas wellhead prices will average $4.50 per MMBtu for the third quarter (July–September) of 2003 (Short-Term Energy Outlook, August 2003), or about 10 cents less than had been estimated in last month’s 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 summer’s 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 summer’s 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.
Source: Energy
Information Administration, Short-Term Energy Outlook, August 2003. Need Help? |
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Energy Information Administration, EI 30 |
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