for week ending June 2, 2004 | Release date: June 3, 2004 | Previous weeks
Overview:
Thursday, June 3 (next release 2:00 p.m. on June 10)
Natural
gas futures prices moved down during the holiday-shortened trading week
(Wednesday to Wednesday, May 26-June 2) joined by falling spot prices in
markets east of the Rocky Mountains, while cash prices in western market
locations rose appreciably. The spot
price at the Henry Hub declined 19 cents per MMBtu on
the week, or nearly 3 percent, to $6.51.
On the New York Mercantile Exchange (NYMEX), the settlement price for
the futures contract for July delivery fell by $0.213 to $6.519 per MMBtu. EIA reported
that inventories were 1,564 Bcf as of Friday, May 28,
which is 0.5 percent less than the 5-year average. The spot price for West Texas Intermediate
(WTI) crude oil was 64 cents per barrel (11 cents per MMBtu)
below its level of last Wednesday (May 26), ending trading yesterday (June 2)
at $39.96 ($6.89 per MMBtu), after hitting a record
high spot price of $42.33 ($7.30 per MMBtu) on
Tuesday.
Spot prices at nearly all market locations east of
the Rocky Mountains moved lower on the week, mostly in the range of 10 to 20
cents per MMBtu.
Price increases of mostly a dime or less in each of the past two days
were not enough to offset the price declines of last Thursday and Friday (May
27-28). Prices declined on Thursday and
Friday due to anticipated soft demand over the long Memorial Day holiday
weekend, moderating temperatures in the Midwest, Northeast, and Middle
Atlantic, and short-term weather forecasts for more of the same early this
week. The average spot
price in Louisiana and the Gulf Coast region declined by 17 cents to $6.49 per MMBtu, while the decline in the Midcontinent
was slightly less, at an average of 11 cents, to $6.19 per MMBtu. Prices for delivery to Chicago and New York citygates declined 12 and 31 cents per MMBtu,
respectively, to $6.57 and $6.92.
Because of the holiday on Monday (May 31), most of Friday's trading was
for gas to flow on Tuesday (June 1).
This gave added weight to National Weather Service short-term
temperature outlooks, which called for above-normal temperatures throughout the
West beginning June 1. This would help
to explain Friday's significant price increases in the Rockies and California. The anticipated higher temperature-driven
swing demand, on top of the return to normal economic activity after the
holiday weekend, sent prices up on Friday (May 28) by as much as 39 cents in
the Rockies and 56 cents in California, with the increases spreading into
upstream market locations in West Texas as well. For the week, Rockies market locations
averaged a 21-cent increase, to a regional average of $5.69 per MMBtu. California
price increases were the largest, bringing that market area's average spot
price to $6.17 per MMBtu as of the end of trading
yesterday (Wednesday, June 2).
On the NYMEX, futures settlement prices ended a
5-week run of consecutive week-to-week increases, as the near-month contract
(for July delivery) fell $0.213 per MMBtu on the week
to yesterday's settlement price of $6.519.
Week-to-week price decreases on contracts for delivery in out-months
through June 2005 were progressively smaller, with declines ranging from more
than 19 cents per MMBtu to less than half a
penny. Futures settlement prices
fluctuated greatly during the week, as daily price changes were generally from
10 to more than 20 cents per MMBtu for all contracts
for delivery through January 2005. Some
of this volatility has been driven in part by volatility in the petroleum and
products futures markets, where current world-wide tight supply and
uncertainties about OPEC production increases and the security of Middle East
supplies led to dramatic price swings over the past week.
Recent Natural Gas
Market Data
Estimated Average Wellhead Prices |
||||||
|
Nov-03 |
Dec-03 |
Jan-04 |
Feb-04 |
Mar-04 |
Apr-04 |
Price ($ 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 storage increased by 87 Bcf to 1,564 Bcf as of Friday, May 28, according to EIA's
Weekly Natural Gas Storage Report. The implied net injection of 87 Bcf is below the 5-year (1999-2003) average for the week of
93 Bcf, leaving stocks 0.5 percent below the 5-year
average level (See Storage
Figure).
For the week ending May 29, National Weather Service data show that
temperatures averaged above normal for much of the Middle Atlantic, the
Southeast, and parts of
Other
Market Trends:
Status Report
for New LNG Facilities: On Wednesday, May 26, the Environmental Protection Agency issued air
and water permits effective June 19, 2004, for construction and operation of
the Port Pelican liquefied natural gas (LNG) terminal proposed by Port Pelican
LLC, a subsidiary of ChevronTexaco Corp. In November
2003, the project had received approval for a Deepwater Port License from the
Maritime Administration of the Department of Transportation and the Coast Guard
to construct, own, and operate an offshore LNG terminal in the Gulf of Mexico.
Port Pelican will be the first deepwater port in the United States since the
1976 Louisiana offshore oil port, and will be the first natural gas deepwater
port in the world. The receiving and regasification
facility will be capable of handling 1.6 Bcf per day
and is scheduled to start operating in 2006. The proposed Freeport LNG terminal in
Freeport, Texas, was issued a favorable final environmental impact study (FEIS)
by the Federal Energy Regulatory Commission (FERC) on Friday, May 28, 2004. The
proposed facility would be the second FERC-approved LNG terminal in the United
States in 25 years, after the Cameron LNG terminal in Louisiana. The facility
will be designed with a storage capacity of 6.9 Bcf
and a send-out rate of 1.5 Bcf per day and is
scheduled to start operating in the second half of 2007. Dow Chemical signed a
20-year contract to reserve 500 MMcf per day of
Freeport's capacity and ConocoPhillips contracted the
remaining 1 Bcf.
Shell Works to
Reopen the Mars Platform: Located in the Gulf of Mexico, 130 miles southeast of New Orleans, the
Mars tension leg platform was shut down on May 22, 2004. A pipeline leak was detected after losing
approximately 3 gallons of crude oil.
The platform is 3,250 feet high, weighs approximately 36,500 tons, and
is in 2,940 feet of water. Mars was
producing 150,000 barrels of oil per day and 170 million cubic feet of gas per
day before the shut down. According to
Shell Oil the oil pipeline from the platform will remain shut-in until repairs
can be made. Shell owns 71.5 percent of
the Mars platform and BP owns the rest.
Summary:
Natural gas spot prices rose significantly in the
West as rising temperatures beginning over the weekend spurred electric
generation demand, while prices east of the Rockies declined as temperatures
moderated. Natural gas futures prices,
influenced by crude oil and petroleum products futures prices, showed a weekly
decline for the first time in 6 weeks, as potentially positive developments for
crude oil supply caused crude oil futures prices to ease somewhat on the
week. Natural gas stocks increased to
1,564 Bcf as of Friday, May 28, which is 8 Bcf less than the 5-year average.
Natural
Gas Summary from the Short-Term Energy Outlook