Natural Gas Summary from the Short-Term
Energy Outlook |
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Natural
Gas Summary from the Short-Term Energy Outlook: The Energy Information Administration (EIA)
projects that natural gas wellhead prices will average $4.17 per MMBtu during
the last 3 months of 2003 and increase to $4.32 in January 2004 (Short-Term Energy
Outlook, October 2003).
Prices 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 and reduced industrial demand allowed record
storage refill rates. As of October 3, 2003, working gas levels were only 1
percent below the 5-year average and, barring any disruptions, are on target
to reach 3 Tcf by the end of October. With the improved storage situation,
wellhead prices during the upcoming heating season (November through March),
assuming normal weather, are expected to be about 13 percent less than last
winter ($4.17 vs. $4.68 per MMBtu). But prices in the residential sector are
projected to be about 9 percent higher than last winter, as the recent
decline in wellhead prices is too recent and insufficient to offset the
impact of the substantial spring-summer increase in wellhead prices on
residential prices. Overall in 2003, wellhead prices are expected to average
$4.75 per MMBtu, which is nearly $2 more than the 2002 annual average and the
largest year-to-year increase on record. For 2004, wellhead prices are projected to drop by nearly $0.90 per
MMBtu, or about 20 percent, to $3.86 per MMBtu as the overall supply
situation improves. Natural gas production is
expected to increase by about 2.1 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 and 936 in September. 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 is
expected to fall by about 1.1 percent in 2003 because of reduced demand in
the industrial sector and electric power sectors as a result of high prices
and the sharply lower weather-related demand following the first quarter of
2003. This winter, assuming normal weather, natural gas demand is expected to
be about 2.4 percent less than last winter’s level as gas-weighted heating
degree-days for the season (Q4 2003 and Q1 2004) are projected to be about
3.7 percent less than year-ago levels. Overall in 2004, natural gas demand is
expected to increase because of accelerated economic growth and generally
lower prices.
Source: Energy Information Administration, Short-Term
Energy Outlook, October 2003. Need Help? |
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Energy Information Administration, EI 30 |
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