for week ending March 10, 2004 | Release date: March 11, 2004 | Previous weeks
Overview:
Thursday, March 11, 2004 (next release 2:00 p.m. on March 18)
Spot
price changes were mixed while futures prices edged up by a penny or two over
the past week (Wednesday to Wednesday, March 3-10). Warmer-than-normal temperatures over nearly the
entire nation early in the week gave way to considerably cooler temperatures in
parts of the South and to colder-than-normal temperatures in the Midwest, the
Middle Atlantic, and New England beginning over the weekend. At the Henry Hub, the spot price declined a
penny on the week, ending trading yesterday (Wednesday, March 10) at $5.33 per
MMBtu. On the NYMEX, the futures
contract for April delivery settled yesterday at $5.397 per MMBtu, just 2.2
cents higher than its settlement price one week ago. EIA reported that inventories were 1,143 Bcf
as of Friday, March 5, which is 8.3 percent below the 5-year average. Crude oil prices have generally been rising
over the past 3 to 4 weeks as uncertainty over OPEC's production levels and
continuing civil unrest in Venezuela apply upward pressure on oil prices and,
to some extent, on gas prices.
Nonetheless, the WTI price declined over the past 3 days, and ended the
week with a net gain of 41 cents per barrel (7 cents per MMBtu), at $36.21, or
$6.24 per MMBtu.
Spot prices for the week
were little changed from a week ago at most market locations. The major
exceptions were in the Rocky Mountains and in California, where prices declined
by around 25 to 30 cents on the week. A brief cold snap extending from the
upper Midwest to the East Coast and along the Gulf of Mexico spurred price
gains of up to a quarter at many locations on Friday and Monday, but these were
offset for the most part by declines on Thursday (March 4) and Tuesday (March
9). Cumulative price changes in regional
markets outside of the Rockies and California were generally up or down by no
more than a dime, with Northeast market locations and locations in the producing
areas (South and East Texas and Louisiana) that serve the Northeast showing
mostly small gains, while all other locations generally had small
declines. The New York citygates spot
price gained 1 cent on the week, to $5.76 per MMBtu, while the Chicago citygate
price dropped 2 cents, to $5.35.
Unseasonably mild weather prevailed along the entire Pacific coast. High line-pack on Kern River and on
PG&E's system resulted in an operational flow order (OFO) on the latter
beginning yesterday. California prices
fell by an average of $0.29 per MMBtu for the week, ending yesterday at an
average of $4.94.
On the NYMEX, futures contracts through the next
heating season had gains of less than 3 cents per MMBtu, despite getting some
support early in the week from rising crude oil and petroleum products futures
prices. The April contract price
increased by a cumulative $0.022 per MMBtu to settle yesterday at $5.397. The small gains came despite continuing
National Weather Service near-term forecasts showing normal to above-normal
temperatures in virtually every major gas-consuming region of the country
through the 24th of March. As
recent weather has become more moderate, the daily price variability in the
futures market has declined somewhat. The
largest change in the near-month contract settlement price in the past week was
an increase of 8.2 cents on Thursday (March 4), compared with changes of over
10 cents in prior weeks.
Estimated Average Wellhead Prices |
||||||
|
Sep-03 |
Oct-03 |
Nov-03 |
Dec-03 |
Jan-04 |
Feb-04 |
Price ($ per Mcf) |
4.58 |
4.43 |
4.34 |
5.08 |
5.53 |
5.15 |
Price ($ per MMBtu) |
4.45 |
4.31 |
4.22 |
4.94 |
5.38 |
5.01 |
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 1,027 Btu per cubic foot as
published in Table A4 of the Annual
Energy Review 2002. |
||||||
Source:
Energy Information Administration, Office of Oil and Gas. |
Recent Natural Gas Market Data
Working
gas inventories were 1,143 Bcf as of Friday, March 5, according to EIA's Weekly Natural Gas Storage Report. This level is 8.3 percent below the previous
5-year (1999-2003) average for this week of the year.(See
Storage Figure) The implied net withdrawal from working
gas of 28 Bcf is the second smallest of the 11 observations for this week of
the year (dating back to 1994) in EIA's weekly storage database. Much warmer-than-normal temperatures
prevailed throughout the eastern half of the nation (See Temperature Map)
(See Deviations Map)
during the week covered by this storage report, resulting in significantly
lower space-heating demand in the high gas-consuming regions of the Midwest,
Northeast, and Middle Atlantic, thus reducing the need for storage
withdrawals. According to the latest
data from the National Weather Service, only the Mountain and Pacific Census
Divisions had higher than normal gas-customer weighted heating degree days
(HDD) for the week. HDDs in all other
divisions ranged from over 25 to nearly 60 percent less than normal. For the United States as a whole, HDDs were
31.8 percent lower than normal. Another
factor contributing to the relatively low net withdrawal was the positive price
spread between futures and cash prices during the week of the report, providing
many with a financial incentive to add gas to storage or to hold the gas
already in storage. During the report
week, the near-month contract settlement price averaged 20 cents per MMBtu more
than the Henry Hub spot price, with the differential reaching as much as 38
cents on one trading day (Monday, March 1).
Other
Market Trends:
Exports of
Liquefied Natural Gas (LNG) from
Natural Gas Summary from the Short-Term
Energy Outlook:
EIA
projects that natural gas wellhead prices will remain relatively high through
late spring, averaging $4.89 per MMBtu in March, $4.92 in April, and $4.84 in
May (Short-Term Energy Outlook,
March 2004). Spot prices averaged $5.90 per MMBtu in January but fell to
$4.80 in February as temperatures moderated and heating demand lessened. Still,
underground storage facilities reported above-average withdrawals for February,
leaving storage inventories at the beginning of March about 11 percent lower
than the 5-year average. However, as of March 5, working gas levels were about
55 percent higher than year-earlier levels. Overall in 2004, spot prices are
expected to average $5.04 per MMBtu, declining almost 6 percent from levels in
2003, while wellhead prices will average about $4.90. In 2005, natural gas spot
prices are again likely to average about $5.00 per MMBtu, under the assumption
that domestic and imported supply can continue to grow by about 1 percent per
year.
Natural
gas production is estimated to have increased by 2.2 percent in 2003.
Production is expected to continue to expand through 2005, as natural gas well
completions, which totaled an estimated 20,000 in 2003, continue to grow to
between 21,000 and 22,000 wells per year over the next 2 years. Natural gas
demand is expected to increase by about 2.6 percent in 2004, owing to expected
growth in the economy, along with somewhat lower projected annual average
prices. In 2005, demand is also expected to increase as the economy continues
to expand, although the growth rate slows to 0.4 percent because of expected
reductions in weather-related demand in the first quarter of 2005 relative to
the first quarter of 2004.
Short-Term Natural Gas Market Outlook, March 2004
|
||||||
|
History |
Projections |
||||
|
Dec-03 |
Jan-04 |
Feb-04 |
Mar-04 |
Apr-04 |
May-04 |
PRICES
($/MMBtu) |
|
|
|
|
|
|
Average Wellhead Price |
4.95 |
5.38 |
5.01 |
4.89 |
4.92 |
4.84 |
Residential Price |
8.93 |
9.21 |
9.69 |
9.76 |
10.08 |
10.77 |
Electric Utilities Price |
5.17 |
6.28 |
6.27 |
5.77 |
6.08 |
5.81 |
|
|
|
|
|
|
|
SUPPLY
(Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry Gas Production |
1.639 |
1.652 |
1.542 |
1.665 |
1.632 |
1.674 |
Net Imports |
0.301 |
0.301 |
0.263 |
0.256 |
0.258 |
0.259 |
Imports |
0.362 |
0.362 |
0.319 |
0.316 |
0.313 |
0.317 |
Exports |
0.062 |
0.060 |
0.056 |
0.060 |
0.055 |
0.057 |
Suppl. Gaseous Fuels |
0.007 |
0.007 |
0.005 |
0.005 |
0.004 |
0.005 |
Total New Supply |
1.946 |
1.960 |
1.810 |
1.926 |
1.894 |
1.939 |
|
|
|
|
|
|
|
Working Gas in Storage |
|
|
|
|
|
|
Opening |
3.038 |
2.582 |
1.795 |
1.155 |
0.913 |
1.154 |
Closing |
2.582 |
1.795 |
1.155 |
0.913 |
1.154 |
1.537 |
Net Storage Withdrawal |
0.456 |
0.787 |
0.640 |
0.242 |
-0.241 |
-0.383 |
|
|
|
|
|
|
|
Total Supply |
2.403 |
2.747 |
2.450 |
2.168 |
1.653 |
1.555 |
|
|
|
|
|
|
|
Balancing Item |
-0.167 |
-0.091 |
0.025 |
0.075 |
0.172 |
-0.027 |
|
|
|
|
|
|
|
Total
Primary Supply |
2.235 |
2.655 |
2.475 |
2.243 |
1.825 |
1.528 |
|
|
|
|
|
|
|
DEMAND
(Trillion Cubic Feet) |
|
|
|
|
|
|
Lease & Plant Fuel |
0.097 |
0.096 |
0.089 |
0.095 |
0.092 |
0.095 |
Pipeline Use |
0.071 |
0.083 |
0.076 |
0.067 |
0.053 |
0.046 |
Delivered to Consumers |
2.068 |
2.477 |
2.310 |
2.082 |
1.680 |
1.388 |
Residential |
0.686 |
0.960 |
0.860 |
0.664 |
0.427 |
0.239 |
Commercial |
0.393 |
0.502 |
0.473 |
0.396 |
0.281 |
0.185 |
Industrial |
0.651 |
0.675 |
0.657 |
0.664 |
0.622 |
0.577 |
Electric Power |
0.337 |
0.340 |
0.320 |
0.358 |
0.350 |
0.388 |
Total Demand |
2.235 |
2.655 |
2.475 |
2.243 |
1.825 |
1.528 |
Source: Energy Information Administration, Short-Term
Energy Outlook, March 2004.