for week ending September 10, 2003 | Release date: September 11, 2003 | Previous weeks
Spot natural gas prices increased 5 to 15 cents in
most regional markets for the week (Wednesday to Wednesday, September
3-10). The Henry Hub spot price gained
10 cents on the week, ending trading yesterday (Wednesday, September 10) at
$4.78 per MMBtu. Futures prices were up
as well, with the gains owing almost entirely to yesterday's large price
increases. The NYMEX futures contract
for October delivery moved up nearly 24 cents in yesterday's trading, and for
the week gained $0.278 per MMBtu with its settlement yesterday at $4.968. The Energy Information Administration (EIA)
reported that inventories were 2,486 Bcf as of Friday, September 5, which is
5.5 percent less than the 5-year (1998-2002) average. The spot price for West Texas Intermediate (WTI) crude oil fell
below $29 per barrel for the first time since late June, lingering in the
high-$28s for the first 3 days of the week before regaining nearly all of its
decreases on Tuesday and Wednesday. WTI
crude oil ended the week at $29.41 per barrel ($5.07 per MMBtu), just 2 cents
per barrel below the week-ago price.
In a week with little in
the way of temperature extremes outside of the desert Southwest and parts of
inland California, spot prices nonetheless inched up a few pennies most days at
most locations. Lacking strong
fundamentals, spot prices were influenced in large measure by movements on the
futures markets, with spot price changes mirroring futures price changes lagged
by a day (most spot gas trading is completed well before the daily close of
natural gas futures trading). The
exception to the generally upward price trend occurred on Tuesday (September
9). However, prices increased again
yesterday, driven primarily by uncertainty over the future track of Hurricane
Isabel, which as of Wednesday seemed headed for a possible entry into the Gulf
of Mexico. For the week, spot prices
gained 5 to 15 cents at most market locations, with the smallest gains at
California locations and some decreases at Rocky Mountains points. The Northeast tended to have the highest
prices, with a regional average yesterday of $5.05 per MMBtu, while the lowest
prices were seen in West Texas and the Rockies, where prices averaged $4.60 and
$4.50, respectively.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
4-Sep |
5-Sep |
8-Sep |
9-Sep |
10-Sep |
|
Henry Hub |
4.68 |
4.77 |
4.82 |
4.70 |
4.78 |
New York |
5.02 |
5.06 |
5.16 |
5.06 |
5.13 |
Chicago |
4.77 |
4.80 |
4.91 |
4.82 |
4.91 |
Cal. Comp. Avg,* |
4.75 |
4.75 |
4.81 |
4.73 |
4.76 |
Futures ($/MMBtu) |
|
|
|
|
|
Oct delivery |
4.810 |
4.771 |
4.661 |
4.730 |
4.968 |
Nov delivery |
5.046 |
5.023 |
4.919 |
4.967 |
5.178 |
*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). |
Hurricane Isabel exerted
even stronger influence in the futures market. A category 4 storm on the 5-level Saffir-Simpson Hurricane Level scale,
Hurricane Isabel had maximum sustained winds of 145 mph as of Thursday morning
(September 11), and was moving toward the west on a track that could well put
her in the Gulf of Mexico by late next week. Before yesterday's price increase of about 24 cents induced by Isabel's
potential for major disruption of Gulf supply, the settlement price of the
near-month contract (for October delivery) was up by less than 4 cents from
last Wednesday's (September 3) level, and the out-month contracts for December
2003 through March 2004 were down by a penny or two. However, with yesterday's trading action, the October contract
increased $0.278 per MMBtu for the week, settling yesterday at $4.968. Contract settlement prices for delivery in
November through April increased from over 10 to over 21 cents per MMBtu.
Estimated Average Wellhead Prices |
||||||
|
Mar-03 |
Apr-03 |
May-03 |
Jun-03 |
Jul-03 |
Aug-03 |
Price ($ per Mcf) |
6.69 |
4.71 |
4.97 |
5.35 |
4.91 |
4.72 |
Price ($ per MMBtu) |
6.52 |
4.59 |
4.84 |
5.21 |
4.79 |
4.60 |
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 97 Bcf to 2,486
Bcf as of Friday, September 5, reducing the deficit from the 5-year (1998-2002)
average by over 1 percentage point to 5.5 percent. (See Storage Figure). The implied net injections into inventory at the national as well
as at all three regional levels were well above both the 5-year average
injections for the week and the injections recorded last year. Implied net injections ranged from over 22
percent greater than the 5-year average in the East region to almost 108
percent greater in the Producing region. The net inventory change of 10 Bcf in the West region is two-thirds
larger than average, and brought the West's stocks to 1.2 percent above
the 5-year average for this point in the refill season. A significant drop in cumulative cooling
degree days (CDD) from the week ended August 30 to the week of
the current storage estimate reduced gas demand for space cooling requirements,
freeing more gas for injection into storage. (See Temperature Map.)
(See Deviation Map) CDDs for the week were below
normal for six of the nation's nine Census divisions. In the gas-use intensive East North Central, West South Central,
and Middle Atlantic Census divisions, CDDs dropped from as much as 85 percent
above normal in the prior week to as much as 65 percent below normal in the
report week.
All Volumes
in Bcf |
Current
Stocks 9/5/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent Difference
from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 8/29/03 |
|
East Region |
1,478 |
1,572 |
-6.0% |
60 |
1,418 |
|
West Region |
339 |
335 |
1.2% |
9 |
329 |
|
Producing
Region |
669 |
726 |
-7.9% |
28 |
642 |
|
Total Lower
48 |
2,486 |
2,632 |
-5.5% |
97 |
2,389 |
|
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:
Differences Between Storage Estimates from the EIA
Weekly and Monthly Storage Series: Significant differences between the weekly and monthly natural gas storage
estimates have appeared in estimates for spring 2003. A review of American Gas Association and EIA storage data
since1994 show that such differences have occurred in the past, especially
during years with a large storage drawdown, with a seasonal cycle in which
differences diminished during the refill season. The April 2003 monthly value of 900 Bcf differs from the
interpolated weekly estimates by 87 Bcf. Of this difference, 11 Bcf is due to reclassified base gas that was not
reported to the weekly system until later. EIA continually examines its methods and processes for ways to
improve. Recent efforts have been
directed to understanding the remaining difference of 76 Bcf in the April
values and to address possible options for modifying the estimation procedure
in the weekly system. At this point, it
is premature to speculate; no conclusions have been reached regarding the
causes of the differences or the extent to which they are likely to persist. Consequently, no change in the methodology
for the weekly storage estimates has been made, none has been selected for the
future, and there is no current schedule for such changes. If a change in methodology is selected, EIA
will announce the change in advance. These announcements would occur on EIA=s web-site and through
official announcements from EIA.
Natural Gas Summary from
the Short-Term Energy Outlook:
EIA projects that natural gas
wellhead prices will average $4.50 per MMBtu in September and range between
$4.37 and $4.58 per MMBtu in the last 3 months of 2003 (Short-Term
Energy Outlook, September 2003). Spot
prices at the Henry Hub have fallen somewhat from the unusually high levels
that prevailed in the first half of the year and most of July, as mild summer
weather in many areas of the country has reduced cooling demand and allowed
record storage refill rates. As of
September 5, working gas levels were only 5.5 percent below the 5-year average
and, barring any disruptions, are on target to reach 3 Tcf by the end of
October. However, gas prices remain high—wellhead prices this summer are
estimated to be 60 to 70 percent higher than levels last summer. Overall in
2003, wellhead prices are expected to average $4.84 per MMBtu, which is nearly
$2 more than the 2002 annual average and the largest year-to-year increase on
record. For 2004, assuming normal weather, wellhead prices are projected
to drop by about $1 per MMBtu, or almost 20 percent, to $3.89 per MMBtu, as the
overall supply situation improves.
Natural gas production is
expected to increase by about 2.4 percent in 2003. Following the downturn in natural gas-directed drilling activity
in 2002, higher natural gas prices and sharply higher oil and natural gas field
revenues continue to drive the resurgence in drilling this year. The number of
rigs drilling for natural gas has totaled more than 900 since the week ending
June 13 and averaged 932 in August. In 2004, production is expected to remain
at modestly improved levels. The prospects for significant reductions in
natural gas wellhead prices in 2004 depend on the productivity of the expected
upsurge in drilling.
Natural
gas demand growth is expected to be flat in 2003 because of reduced demand in
the industrial sector and the sharply lower weather-related demand during the
summer months. Demand for natural gas
this summer is estimated to be 2.6 percent less than last summer's level, owing
largely to the 11 percent fewer cooling degree-days compared with last summer
and the effect of high natural gas prices on consumption in the industrial and
electricity-generating sectors. In
2004, demand is projected to remain flat as increases in industrial and
commercial sector demand are offset by lower demand in the electric power sector.
Short-Term Natural Gas Market
Outlook, September 2003
|
||||||
|
History |
Projections |
||||
|
Jun-03 |
Jul-03 |
Aug-03 |
Sep-03 |
Oct-03 |
Nov-03 |
PRICES
($/MMBtu) |
|
|
|
|
|
|
Average Wellhead Price |
5.22 |
4.78 |
4.60 |
4.50 |
4.37 |
4.48 |
Residential Price |
11.98 |
12.27 |
12.23 |
11.62 |
10.33 |
9.45 |
Electric Utilities Price |
5.67 |
5.17 |
4.94 |
5.01 |
4.92 |
5.28 |
|
|
|
|
|
|
|
SUPPLY
(Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry Gas Production |
1.590 |
1.651 |
1.657 |
1.605 |
1.665 |
1.612 |
Net Imports |
0.278 |
0.308 |
0.326 |
0.320 |
0.311 |
0.293 |
Imports |
0.332 |
0.365 |
0.384 |
0.377 |
0.369 |
0.353 |
Exports |
0.054 |
0.056 |
0.058 |
0.057 |
0.059 |
0.060 |
Suppl. Gaseous Fuels |
0.005 |
0.006 |
0.006 |
0.006 |
0.006 |
0.007 |
Total New Supply |
1.873 |
1.966 |
1.989 |
1.931 |
1.982 |
1.912 |
|
|
|
|
|
|
|
Working Gas in Storage |
|
|
|
|
|
|
Opening |
1.217 |
1.710 |
2.095 |
2.410 |
2.782 |
3.001 |
Closing |
1.710 |
2.095 |
2.410 |
2.782 |
3.001 |
2.842 |
Net Storage Withdrawal |
-0.493 |
-0.386 |
-0.315 |
-0.372 |
-0.219 |
0.160 |
|
|
|
|
|
|
|
Total Supply |
1.380 |
1.580 |
1.674 |
1.559 |
1.763 |
2.072 |
|
|
|
|
|
|
|
Balancing Item |
0.107 |
0.071 |
0.003 |
-0.031 |
-0.221 |
-0.277 |
|
|
|
|
|
|
|
Total Primary Supply |
1.487 |
1.651 |
1.677 |
1.528 |
1.543 |
1.795 |
|
|
|
|
|
|
|
DEMAND
(Trillion Cubic Feet) |
|
|
|
|
|
|
Lease & Plant Fuel |
0.082 |
0.084 |
0.082 |
0.075 |
0.077 |
0.080 |
Pipeline Use |
0.043 |
0.051 |
0.053 |
0.048 |
0.049 |
0.054 |
Delivered to Consumers |
1.363 |
1.516 |
1.542 |
1.405 |
1.416 |
1.660 |
Residential |
0.152 |
0.114 |
0.104 |
0.119 |
0.206 |
0.435 |
Commercial |
0.137 |
0.131 |
0.127 |
0.128 |
0.180 |
0.276 |
Industrial |
0.562 |
0.590 |
0.602 |
0.578 |
0.620 |
0.617 |
Electric Power |
0.512 |
0.682 |
0.709 |
0.580 |
0.410 |
0.332 |
Total Demand |
1.487 |
1.651 |
1.677 |
1.528 |
1.543 |
1.795 |
Source: Energy Information Administration, Short-Term
Energy Outlook, September 2003.