for week ending October 1, 2003 | Release date: October 2, 2003 | Previous weeks
A cold front moved through the
Midwest and parts of the Northeast this week, but it failed to bring sustained higher
prices. Seasonally mild temperatures in most other areas of the country and
little in the way of tropical storm activity resulted in prices easing 20 cents
per MMBtu or less since Wednesday, September 24. On the week (Wednesday,
September 24-Wednesday, October 1), the Henry Hub spot price dropped 12 cents
per MMBtu to $4.47. The NYMEX futures contract for October delivery expired on
Friday, September 26, at $4.430, while the contract for November lost about 8
cents on the week to close at $4.677 yesterday (October 1). Natural gas in
storage as of Friday, September 26, increased to 2,788 Bcf, which is 1.9
percent below the 5-year average inventory for the report week. The spot price
for West Texas Intermediate (WTI) crude oil rose $1.24 per barrel on the week
to yesterday's (October 1) closing price of $29.43 per barrel, or $5.07 per
MMBtu.
With the exception of the
Midwest, moderate weather reigned in most regions of the country this past
week, providing a slight easing of prices at most market locations. Another
week of the hurricane season also passed without interruption of production,
although Hurricane Juan came close to affecting Canadian East Coast production
near Sable Island over the weekend, and limited tropical storm activity
continued in the Gulf of Mexico. For the week, the spot price at the Henry Hub
dropped about 3 percent to $4.47 per MMBtu, while other pricing points on the
Gulf Coast showed slightly greater declines, with prices falling below $4.40 at
most locations in Louisiana. The overall easing of prices may also reflect the
improving storage picture as injections in the previous 2 weeks were the
highest fall shoulder-month injections in the nearly 10-year history of EIA
weekly storage data. Exceptions to the general price trend included trading in
the Midwest, where an early cold front (with temperatures in the 30s) reached
as far south as the Ohio River, boosting the price of gas at the Chicago
citygate 5 cents per MMBtu on the week to $4.72. Although prices in the West were generally lower on the week by a
dime or less, a turbine outage on El Paso Natural Gas in the San Juan Basin
boosted prices temporarily. El Paso reduced capacity on its Hanover Crossover
system by 145 million cubic feet a day for Monday and Tuesday, and then declared
a penalty situation for overpulls, saying its Washington Ranch storage facility
was experiencing maximum withdrawals. The spot price at the El Paso non-Bondad
trading point surged 31 cents per MMBtu on Tuesday to $4.44, but dropped to
$4.28 yesterday, which is a net decrease of 3 cents since Wednesday, September
24.
Spot Prices ($ per MMBtu) |
Thur. |
Fri. |
Mon. |
Tues. |
Wed. |
25-Sep |
26-Sep |
29-Sep |
30-Sep |
1-Oct |
|
Henry Hub |
4.55 |
4.41 |
4.57 |
4.67 |
4.47 |
New York |
4.88 |
4.74 |
5.03 |
5.06 |
4.85 |
Chicago |
4.61 |
4.52 |
4.75 |
4.88 |
4.72 |
Cal. Comp. Avg,* |
4.49 |
4.24 |
4.53 |
4.70 |
4.54 |
Futures ($/MMBtu) |
|
|
|
|
|
Oct delivery |
4.542 |
4.430 |
expired |
expired |
expired |
Nov delivery |
4.703 |
4.621 |
4.895 |
4.830 |
4.677 |
Dec delivery |
4.949 |
4.881 |
5.130 |
5.082 |
4.942 |
*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 price of the futures contract for
October delivery at the Henry Hub dropped a little over 11 cents per MMBtu on its
last day of trading as the near-month contract last Friday to expire at $4.430.
The October contract settled almost 50 cents per MMBtu, or 10 percent, lower
than the September contract's price at expiration, as seasonably mild
temperatures and relatively high storage injections led to a general softening
of prices through last month. Still, the October 2003 contract closed a little
over 74 cents per MMBtu, or approximately 20 percent, higher than the October
2002 expiry price of $3.686. As the near-month contract, the November contract
surged over 27 cents per MMBtu on Monday in response to short-term forecasts
for cooler-than-normal temperatures in the Midwest. However, with mild
temperatures expected to return throughout the country, the November contract
has fallen a cumulative 22 cents in the past two trading sessions to its close
of $4.677 yesterday. The January 2004 contract closed yesterday at $5.142, a
premium of over 67 cents to yesterday's Henry Hub spot price, providing a
strong incentive for storage refill. The average closing price for gas through
the peak winter month contracts (December 2003-February 2004) yesterday was
$5.063 per MMBtu, while at this time last year the peak winter futures
contracts average was $4.264 per MMBtu.
Estimated Average Wellhead Prices |
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|
Mar-03 |
Apr-03 |
May-03 |
Jun-03 |
Jul-03 |
Aug-03 |
Price ($ 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 as of September 26 was 2,788
Bcf, which is 1.9 percent below the 5-year average inventory level for the comparable
reporting week, according to EIA's Weekly Natural Gas Storage Report. (See Storage Figure).
The implied net injection for the report week was 100 Bcf, marking the third
consecutive week of 100 Bcf or greater injections. The implied injection is
more than double last year's net
injection for the report week of 47 Bcf and about 61 percent more than the
5-year average of 62 Bcf. Throughout the West, warmer-than-normal temperatures during the week
may have contributed to demand for gas as a fuel for electric generation, as
the Mountain and Pacific regions combined experienced temperatures over 50
percent warmer-than-normal, as measured by cooling degree days (CDDs) for the
week ended September 27, according to the National Weather Service. However,
seasonally mild temperatures in other areas likely generated little
weather-sensitive demand, allowing for the continuing robust levels of net
injections. (See Temperature Map.)
(See Deviation Map)
All Volumes
in Bcf |
Current
Stocks 9/26/03 |
Estimated
Prior 5-Year (1998-2002) Average |
Percent
Difference from 5 Year Average |
Implied Net
Change from Last Week |
One-Week
Prior Stocks 9/19/03 |
|
East Region |
1,667 |
1,711 |
-2.6% |
64 |
1,603 |
|
West Region |
366 |
354 |
3.4% |
6 |
360 |
|
Producing
Region |
755 |
778 |
-3.0% |
30 |
725 |
|
Total Lower
48 |
2,788 |
2,843 |
-1.9% |
100 |
2,688 |
|
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:
Natural Gas Rig Counts: The number of rigs drilling for natural gas climbed by 7 to 943
for the week ending September 26, according to Baker-Hughes Incorporated. This
is the second highest rig count since the week ended September 28, 2001, falling
1 rig short of the level reported on August 29, 2003. The number of natural gas
rigs is over 27 percent greater than last year at this time, and 30 percent
above the 5-year average for the report week. The rig count has climbed nearly 31 percent in 2003, contrasting with
last year's narrow decline of less than 1 percent for the same 39-week period.
The share of rigs drilling for natural gas was 86.1 percent for the report
week, remaining consistently above 80 percent since May 2001. This is the longest
period of time in the 15 years that Baker-Hughes has separately reported gas
and oil drilling rigs that rigs drilling for natural gas have comprised more
than 80 percent of total rigs drilling. The emphasis on gas prospects reflects
a relative advantage in the economics of natural gas prospects compared with
domestic crude oil prospects.
Summary:
Natural gas spot prices at most market locations
declined up to 20 cents per MMBtu as moderate temperatures prevailed throughout
the Lower 48 States, with the exception of the Midwest. Futures contract prices
for delivery through March 2004 also moved lower, by around 6 to 8 cents per
MMBtu. Natural gas in storage as of September 26 was 2,788 Bcf, which is a net
increase of 100 Bcf from the previous week.
Natural
Gas Summary from the Short-Term Energy Outlook