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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

   

Natural Gas Summary from the Short-Term Energy Outlook:

 

The Energy Information Administration (EIA) projects that natural gas wellhead prices will average $5.57 per MMBtu in January 2004 and $5.40 in February, and then decrease to $4.77 in March as the heating season winds down (Short-Term Energy Outlook, January 2004). Spot prices were quite variable in December, with prices at the Henry Hub starting the month at around $5.00 per MMBtu, spiking to roughly $7.00 in the middle of the month, then falling to $5.50 toward the end of the month as warmer-than-normal weather eased demand. Spot prices will likely remain well above $5.00 over the next few months if normal or colder weather prevails, especially with oil prices remaining at relatively high levels. (Oil prices this winter are expected to average $31.35 per barrel (19 cents higher than last winterís average), or 5.41 per MMBtu.)Natural gas storage levels were 8 percent above average as of January 2, which could place downward pressure on prices if warm temperatures and weak heating demand occur later this winter, just as rising prices are possible if the weather becomes colder.Overall in 2004, natural gas wellhead prices are expected to average $4.73 per MMBtu, while spot prices will average nearly $5.00. In 2005, natural gas spot prices are projected to fall to an average of $4.83 per MMBtu under the assumption that domestic and imported supply can continue to grow by about 1-1.5 percent per year.

 

Early estimates indicate that natural gas production increased by about 2.0 percent in 2003. Natural gas production is expected to continue to expand modestly through 2005, as natural gas well completions, which totaled an estimated 20,000 in 2003, continue to grow to between 21,000 and 22,000 wells per year over the next 2 years. Natural gas demand is expected to have declined by 2.6 percent in 2003 largely because high prices discouraged demand in the industrial and electric power.However, expected growth in the economy, along with somewhat lower projected annual average prices, are expected to increase demand by about 1.2 percent in 2004. Demand in 2005 is expected to increase by 1.8 percent as the economy continues to expand and prices ease slightly.


 

Short-Term Natural Gas Market Outlook, January 2004 

 

History

Projections

 

Oct-03

Nov-03

Dec-03

Jan-04

Feb-04

Mar-04

PRICES ($/MMBtu)

 

 

 

 

 

 

Average Wellhead Price

4.31

4.23

4.97

5.57

5.40

4.77

Residential Price

9.89

9.05

8.89

9.19

9.57

9.61

Electric Utilities Price

4.67

4.54

5.42

6.79

6.13

5.26

 

 

 

 

 

 

 

SUPPLY (Trillion Cubic Feet)

 

 

 

 

 

 

Total Dry Gas Production

1.627

1.607

1.647

1.668

1.555

1.671

Net Imports

0.283

0.298

0.326

0.300

0.271

0.276

††† Imports

0.343

0.359

0.387

0.359

0.328

0.339

††† Exports

0.060

0.061

0.061

0.059

0.057

0.063

Suppl. Gaseous Fuels

0.006

0.007

0.007

0.008

0.006

0.007

Total New Supply

1.916

1.911

1.981

1.976

1.833

1.954

 

 

 

 

 

 

 

Working Gas in Storage

 

 

 

 

 

 

††† Opening

2.843

3.155

3.063

2.505

1.892

1.371

††† Closing

3.155

3.063

2.505

1.892

1.371

1.147

Net Storage Withdrawal

-0.312

0.092

0.558

0.613

0.521

0.223

 

 

 

 

 

 

 

Total Supply

1.604

2.003

2.539

2.589

2.354

2.177

 

 

 

 

 

 

 

Balancing Item

-0.045

-0.208

-0.337

-0.054

0.016

-0.012

 

 

 

 

 

 

 

Total Primary Supply

1.559

1.795

2.202

2.535

2.370

2.165

 

 

 

 

 

 

 

DEMAND (Trillion Cubic Feet)

 

 

 

 

 

 

Lease & Plant Fuel

0.091

0.090

0.093

0.092

0.085

0.092

Pipeline Use

0.046

0.055

0.070

0.080

0.073

0.063

Delivered to Consumers

1.422

1.650

2.039

2.363

2.212

2.010

††† Residential

0.229

0.420

0.680

0.908

0.818

0.658

†† Commercial

0.181

0.267

0.386

0.479

0.455

0.390

††† Industrial

0.585

0.592

0.613

0.633

0.617

0.605

††† Electric Power

0.428

0.371

0.360

0.343

0.322

0.358

Total Demand

1.559

1.795

2.202

2.535

2.370

2.165

 

 

Source:Energy Information Administration, Short-Term Energy Outlook, January 2004.

 

 

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