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Natural Gas Weekly Update Archive

for week ending May 19, 2004  |  Release date:  May 20, 2004   |  Previous weeks

Overview: Thursday, May 20 (next release 2:00 p.m. on May 27)

Since Wednesday, May 12, natural gas spot prices have decreased at virtually all market locations in the Lower 48 States. For the week (Wednesday-Wednesday), prices at the Henry Hub decreased 21 cents or about 3 percent to $6.18 per MMBtu. Yesterday (May 19), the price of the NYMEX futures contract for June delivery at the Henry Hub settled at $6.455 per MMBtu, decreasing roughly 5 cents or less than 1 percent since last Wednesday. Natural gas in storage was 1,388 Bcf as of May 14, which is 1.1 percent below the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil climbed $1.31 per barrel or 3 percent on the week to $41.61 per barrel or $7.174 per MMBtu.





Moderating temperatures led to price declines of 12 to 48 cents per MMBtu at virtually all market locations in the Lower 48 States since last Wednesday, May 12. The steepest declines occurred principally west of the Rockies, where prices fell more than 35 cents per MMBtu at most markets. In California, prices fell more than 40 cents per MMBtu, while declines in the Rocky Mountains region averaged roughly 36 cents per MMBtu. East of the Rockies, price decreases were widespread with declines ranging between 20 and 35 cents per MMBtu at most markets. These declines were more pronounced along the northern tier with declines averaging 28, 27, and 23 cents per MMBtu in the Midcontinent, Northeast and Midwest regions, respectively. In the south, including Texas, Louisiana, and Florida, price decreases were less than 23 cents per MMBtu on average. Despite these widespread declines, prices nevertheless remain somewhat high relative to historical trends and exceed last year's levels by 3 to 5 percent. For example, prices at the New York citygate are 34 cents or 5 percent above last year's level. Principal contributing factors sustaining the higher price levels likely include higher oil prices this year as the price of crude oil exceeds last year's level by more than 42 percent.



At the NYMEX, the price of the futures contract for May delivery at the Henry Hub increased about 5 cents per MMBtu or nearly 1 percent since last Wednesday to $6.455 per MMBtu. The prices of the futures contracts for delivery in each of the following 6 months climbed about 6 to 10 cents or about 1 percent from last Wednesday's level. Climbing oil prices likely contributed to last week's gains in the futures market. However, the uptick in the futures prices, combined with softening prices in the spot market, led to increased differentials between the spot price and the futures price, which climbed from 2 cents to 28 cents per MMBtu for the June contract. The prices of the futures contracts for each month through the remaining months of 2004 exceed the Henry Hub spot price by 28 to 78 cents per MMBtu. With the futures strip through the remaining months of 2004 now trading at a significant premium to the Henry Hub spot price, suppliers have increased economic incentives to inject gas into storage.



Overview of Natural Gas Data for 2003


Recent Natural Gas Market Data


Estimated Average Wellhead Prices








Price ($ per Mcf)







Price ($ per MMBtu)







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 storage was 1,388 Bcf as of Friday, May 14, 2004, according to the EIA Weekly Natural Gas Storage Report. This is about 1 percent less than the 5-year average for the report week. (See Storage Figure) The implied net injection during the report week was 85 Bcf. This is about 6 percent above the 5-year average net addition of 80 Bcf for the week and about 5 percent below the injection of 90 Bcf reported for the same week last year. Moderating temperatures during the week ended May 14 likely contributed to the higher-than-average rate of injections as temperatures in the Northeast and Midwest regions were close to normal and temperatures elsewhere in the Lower 48 States were cooler than normal. (See Temperature Map) (See Deviations Map)



Other Market Trends:

LNG Imports Double in First Quarter: Imports of liquefied natural gas (LNG) in the first quarter of 2004 increased by 101 percent over the same quarter last year, to the gaseous equivalent of 151.4 billion cubic feet (Bcf) in 61 cargoes, according to preliminary data from the Office of Fossil Energy, U.S. Department of Energy. LNG deliveries have now grown on a quarterly basis more than 100 percent in year-to-year comparison in four of the last five quarters. The Dominion-owned Cove Point LNG terminal, which is the largest of the four operating terminals in the Lower 48 States and is located on the Maryland coast of the Chesapeake Bay, received 52 Bcf, while Tractebel's Everett facility, located near Boston, Massachusetts, received the second largest amount at 46.7 Bcf. Trunkline LNG, near Lake Charles, Louisiana, on the Calcasieu River, received 31.8 Bcf, and El Paso's Southern LNG terminal, located on Elba Island, Georgia, on the Savannah River, received 21 Bcf. The source country for the largest volume was Trinidad and Tobago, which supplied 122 Bcf from the Point Fortin plant. Algeria was the source of approximately 24 Bcf, while Oman supplied 3 Bcf. The growth of LNG imports was strong, despite seasonal demand across the globe that during the winter often increases competition for limited short-term or "spot" LNG cargoes. Despite the increased volumes, utilization factors at the terminals still appear to be relatively low, ranging from 35 to 73 percent based on peak deliverability of the terminals.



Moderating temperatures reduced natural gas demand in most parts of the country, contributing to lower spot prices at most market locations. Prices increased about 1 percent at the NYMEX futures market from last week's level. Working gas in storage increased to 1,388 Bcf, which is 1 percent below the 5-year average.


Natural Gas Summary from the Short-Term Energy Outlook