for week ending May 12, 2004 | Release date: May 13, 2004 | Previous weeks
Overview:
Thursday, May 13 (next release 2:00 p.m. on May 20)
Natural
gas prices in both the cash and futures markets continued to move up for a
third straight week. For the week (Wednesday
to Wednesday, May 5-12), the Henry Hub spot price matched its 30-cent increase
of the prior week, trading yesterday (May 12) at $6.39 per MMBtu. On the NYMEX, the futures contract for June
2004 delivery increased by just under 10 cents on the week, settling yesterday
at its record-high level of $6.405 per MMBtu.
EIA reported that inventories were 1,303 Bcf as of Friday, May 7, which
is 1.6 percent below the 5-year (1999-2003) average. The spot price for West Texas Intermediate
crude oil also rose for a third straight week, moving up $0.61 per barrel
($0.11 per MMBtu) from last Wednesday's (May 5) price to yesterday's average of
$40.30 per barrel ($6.95 per MMBtu).
Spot prices had significant gains at virtually every
market location, as lingering cool temperatures in the upper Midwest and
Northeast coupled with generally rising temperatures in the Midcontinent and
parts of the Middle and South Atlantic states provided temperature-driven
demand. Upward pressure came also from
rising crude oil and petroleum product prices.
Since April 21, the Henry Hub spot
price has increased $0.87 per MMBtu, or about 16 percent. The
one exception to rising prices was seen at El Paso-non-Bondad
in the Rockies, where maintenance by Transwestern
Pipeline along its San Juan Lateral beginning Monday caused a weekly decrease
of 21 cents, to $5.38 per MMBtu. Gains
were strongest in the Northeast, where prices increased by an average of 37
cents on the week. The spot prices at Tetco M-3 and for Algonquin citygates
in yesterday's trading were the highest prices in the nation at $7.01 and $7.02
per MMBtu, respectively. Elsewhere,
Florida Gas Transmission (FGT) yesterday issued an Overage Alert Day notice as
rising temperatures prompted increasing demand for air conditioning. For the week, the FGT citygate
price rose $0.35 per MMBtu to $6.68. Price increases tended to be smallest in the
Rockies and in California, averaging 22 and 21 cents for the week,
respectively, as the generally warmer-than-normal temperatures experienced
there equate to comfortable weather at this time of year. Gas consumption for power demand in
California was further offset by the return to operation of the Palo Verde 1
nuclear plant in Arizona, mitigating the higher demand pressure on prices. Likewise, Texas prices might have increased
more than the 26- to 39-cent gains, except that both the South Texas 2 and
Comanche Peak 1 nuclear plants came back on line during the week. The West Texas market—with an average price
of $5.96 per MMBtu—joined the Rockies ($5.52) as the only regional markets
where prices averaged below $6 as of the end of trading yesterday.
On the NYMEX, after recording weekly gains of over
30 cents in the prior 2 weeks, the settlement price for the near-month (June
delivery) futures contract increased by $0.095 per MMBtu on the week, settling
yesterday at $6.405 per MMBtu. This is
the highest settlement price for this contract since it began trading some 71
months ago. Natural gas futures prices
have been heavily influenced of late by rising crude oil and products futures
prices, which have been steadily increasing on concerns over Iraq and the
Middle East, as well as skepticism over whether OPEC can actually quickly
attain significant production growth.
The June crude oil contract rose above $40 on Tuesday (May 11), and
settled yesterday at the second-highest level for any prompt-month crude oil
contract of $40.77 per barrel (the record is $41.15, set October 10, 1990 as
the nation prepared for the Persian Gulf War).
Further, many current weather forecasts are citing the potential for a
hotter-than-normal summer in parts of the country, which would drive demand up
for space-cooling needs. In the two
weeks since becoming the near-month contract on April 29, the June contract has
increased $0.481 per MMBtu, or 8 percent.
Overview of Natural Gas Data for 2003
Recent Natural Gas
Market Data
Estimated Average Wellhead Prices |
||||||
|
Nov-03 |
Dec-03 |
Jan-04 |
Feb-04 |
Mar-04 |
Apr-04 |
Price ($ per Mcf) |
4.34 |
5.08 |
5.53 |
5.15 |
4.97 |
5.20 |
Price ($ per MMBtu) |
4.22 |
4.94 |
5.38 |
5.01 |
4.83 |
5.06 |
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. |
Working gas in underground storage stood at 1,303 Bcf as of Friday, May 7, according to the EIA's Weekly Natural Gas Storage Report issued today (Thursday, May 13). This is 21 Bcf, or 1.6 percent, less than the previous 5-year (1999-2003) average. (See Storage Figure) The implied net injection was 76 Bcf, which exceeds the 5-year average for this week by 7 Bcf, or 10.1 percent. While implied net injections in the East region were slightly below the average, net injections in the West and Producing regions exceeded their respective average additions for the week by 5 Bcf in both regions. The latest heating- and cooling-degree day statistics published by the National Weather Service for the period roughly coinciding with the week covered by this storage report show that weather-related gas demand was fairly slack, allowing for significant injections into storage. (See Temperature Map) (See Deviations Map) Only one of nine Census Divisions (Mountain) had greater-than-normal heating degree days (HDD). HDDs in all other regions ranged from about 21 to nearly 88 percent below normal, and 35.4 percent less than normal for the nation as a whole. As to cooling degree days (CDD), some divisions showed large percentage differences from normal, but the actual CDD levels are relatively low compared with summer levels and therefore do not represent significant cooling demand.
Other
Market Trends:
EIA Solicits Public Comments on Proposed
Revision to Survey Form EIA-910. On Monday, May 10, 2004, EIA issued a Federal Register notice soliciting
public comments on a proposed change to the scope of survey Form EIA-910,
"Monthly Natural Gas Marketer Survey." Currently, gas marketers with
residential or commercial customers in Georgia, Maryland, New York, Ohio, and
Pennsylvania report their number of customers, volumes of natural gas sold, and
revenues. The revision would require marketers in Florida, Illinois, Michigan,
New Jersey, Massachusetts, Virginia, West Virginia, and the District of
Columbia to report the same information. Current published prices in the
commercial sector for the proposed new States and the District of Columbia
represent only 23 to 63 percent of commercial volumes consumed in those
areas. The addition of the new States and the District of Columbia to the
EIA-910 survey frame will bring the percent of volumes represented by published
prices in the commercial sector to 100 percent in those areas. Comments
on the proposed revision must be filed by July 9, 2004.
Natural Gas Summary from
the Short-Term Energy Outlook:
The
Energy Information Administration (EIA) projects that natural gas prices will
remain relatively high for the rest of 2004. Wellhead prices are expected to
average $5.41 per MMBtu through the end of the storage refill season (October
31) and $5.59 in November and December. Spot prices (composites
for producing-area hubs) averaged about $5.30 per MMBtu in the first quarter of
this year but are currently near $6.00. Barring cooler-than-normal weather this
summer, the likelihood appears small that spot prices will fall significantly
below $5.65 per MMBtu for the rest of 2004. Overall in 2004, spot prices will
likely average $5.62 per MMBtu and wellhead prices will average $5.33. In 2005,
spot prices are expected to increase to $5.90 per MMBtu. As in other
recent projections, this outcome depends on modest growth in domestic
production and total available supply (including imports and storage
inventories) in both 2004 and 2005. Underground
storage facilities reported net injections of 199 Bcf for April, well above the
previous 5-year average of 139 Bcf. At the end of April, storage stocks were
only about 2 percent below the 5-year average level and 37 percent higher than
last year at this time based on monthly survey data.
Natural gas production is estimated to have increased by
approximately 0.5 percent in 2003. Growth of about 1 percent in 2004 is
expected as new natural gas well completions, which totaled an estimated 20,000
in 2003, continue to grow to nearly 24,000 wells per year over the next 2
years. Natural gas demand is expected to increase by about 1.3 percent in 2004,
owing to economic growth, high oil prices, and high spot prices for coal in
eastern producing areas. Demand growth in 2005 is expected to be minimal (0.3
percent) as some of the current pressure on natural gas in the electric power
sector eases and relative coal and fuel oil spot prices decline somewhat.
Short-Term Natural Gas Market Outlook, May 2004
|
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|
History |
Projections |
||||
|
Feb-04 |
Mar-04 |
Apr-04 |
May-04 |
Jun-04 |
Jul-04 |
PRICES
($/MMBtu) |
|
|
|
|
|
|
Average Wellhead Price |
5.01 |
4.84 |
5.06 |
5.39 |
5.45 |
5.38 |
Residential Price |
9.43 |
9.07 |
9.52 |
10.50 |
11.65 |
12.21 |
Electric Utilities Price |
6.48 |
5.64 |
5.98 |
6.34 |
6.26 |
6.11 |
|
|
|
|
|
|
|
SUPPLY
(Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry Gas Production |
1.526 |
1.640 |
1.592 |
1.625 |
1.569 |
1.617 |
Net Imports |
0.255 |
0.233 |
0.236 |
0.259 |
0.247 |
0.262 |
Imports |
0.316 |
0.315 |
0.313 |
0.317 |
0.305 |
0.324 |
Exports |
0.062 |
0.065 |
0.058 |
0.058 |
0.058 |
0.061 |
Suppl. Gaseous Fuels |
0.005 |
0.005 |
0.004 |
0.004 |
0.004 |
0.005 |
Total New Supply |
1.786 |
1.877 |
1.832 |
1.888 |
1.820 |
1.884 |
|
|
|
|
|
|
|
Working Gas in Storage |
|
|
|
|
|
|
Opening |
1.751 |
1.163 |
1.028 |
1.227 |
1.612 |
2.002 |
Closing |
1.163 |
1.028 |
1.227 |
1.612 |
2.002 |
2.312 |
Net Storage Withdrawal |
0.588 |
0.135 |
-0.199 |
-0.385 |
-0.390 |
-0.310 |
|
|
|
|
|
|
|
Total Supply |
2.374 |
2.012 |
1.633 |
1.503 |
1.430 |
1.574 |
|
|
|
|
|
|
|
Balancing Item |
0.096 |
0.111 |
0.109 |
0.020 |
-0.005 |
0.025 |
|
|
|
|
|
|
|
Total Primary Supply |
2.470 |
2.123 |
1.742 |
1.523 |
1.425 |
1.599 |
|
|
|
|
|
|
|
DEMAND
(Trillion Cubic Feet) |
|
|
|
|
|
|
Lease & Plant Fuel |
0.090 |
0.096 |
0.091 |
0.094 |
0.091 |
0.094 |
Pipeline Use |
0.070 |
0.062 |
0.051 |
0.046 |
0.042 |
0.046 |
Delivered to Consumers |
2.310 |
1.966 |
1.600 |
1.384 |
1.292 |
1.459 |
Residential |
0.878 |
0.609 |
0.398 |
0.236 |
0.154 |
0.126 |
Commercial |
0.459 |
0.355 |
0.245 |
0.179 |
0.145 |
0.141 |
Industrial |
0.653 |
0.667 |
0.610 |
0.547 |
0.517 |
0.561 |
Electric Power |
0.320 |
0.335 |
0.347 |
0.422 |
0.476 |
0.631 |
Total Demand |
2.470 |
2.123 |
1.742 |
1.523 |
1.425 |
1.599 |
Source: Energy Information Administration, Short-Term
Energy Outlook, May 2004.