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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: The Energy Information Administration (EIA)
projects that natural gas wellhead prices will average $4.18 per MMBtu during
the last 2 months of 2003 and increase to $4.36 in January 2004 (Short-Term Energy
Outlook, November 2003).
Prices have fallen in the past few months as
mild weather and reduced industrial demand have allowed record storage refill
rates. As of October 31, 2003, working gas levels had reached 3,155 Bcf,
which is about 3 percent higher than the 5-year average and the first time
since October 2002 that stocks exceeded the year-earlier levels. With the
improved storage situation, wellhead prices during the current heating season
(November through March) are expected to be about 12 percent less than last
winter ($4.12 vs. $4.68 per MMBtu). However, prices in the residential sector
will likely be about 8 percent higher than last winter, as accumulated
natural gas utility costs through 2003 are recovered in higher household
delivery charges. Overall in 2003, wellhead prices are expected to average
$4.76 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 18 percent, to $3.88 per MMBtu as the overall supply
situation improves. Net imports of natural gas are expected to
increase by 5 percent in 2004, compared with a net decrease in 2003. Pipeline
imports from Canada are down this year for the first time since 1986 and are
projected to be 11 percent less than in 2002 (3.37 Tcf vs. 3.78 Tcf), while
liquefied natural gas (LNG) imports are expected to reach 590 Bcf compared
with 230 Bcf in 2002. Both LNG and pipeline imports are expected to grow in
2004, by 8 percent and 6 percent, respectively. Natural gas
production is expected to increase by about 3 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 weekly number of rigs
drilling for natural gas has exceeded 900 since the week ending June 13 and
averaged 936 in September and 941 in October. 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 2 percent in 2003 because of reduced demand in the
industrial 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, natural gas demand is expected to be about 2 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 2.5 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, November 2003. Need Help? |
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Energy Information Administration, EI 30 |
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