for week ending June 9, 2004 | Release date: June 10, 2004 | Previous weeks
Overview:
Thursday, June 10 (next release 2:00 p.m.on June 17)
Since
Wednesday, June 2, 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 46
cents or about 7 percent to $6.05 per MMBtu.
Yesterday (June 9), the price of the NYMEX futures contract for July
delivery at the Henry Hub settled at $6.082 per MMBtu, decreasing roughly 44
cents or nearly 7 percent since last Wednesday.
Natural gas in storage was 1,666 Bcf as of June 4, which is 0.2 percent
below the 5-year average. The spot price
for West Texas Intermediate (WTI) crude oil fell $2.36 per barrel or nearly 6
percent on the week to $37.60 per barrel or $6.48 per MMBtu.
Widespread moderate temperatures and falling crude
oil prices contributed to price declines of 31 to 87 cents per MMBtu at
virtually all market locations in the Lower 48 States since last Wednesday,
June 2. The steepest declines occurred
principally west of the Rockies, where prices fell more than 70 cents per MMBtu
at most markets, with the largest declines in California. The lack of temperature-driven demand also
caused operational difficulties, with a number of pipelines in the West issuing
either high inventory OFOs or critical notices in response to high linepack on
their systems. East of the Rockies,
price decreases were widespread with declines ranging between 40 and 60 cents
per MMBtu at most markets. These
declines were more pronounced in the central regions of the Lower 48 States
with declines averaging between 50 and 60 cents per MMBtu in the Midcontinent,
Midwest, and Texas regions. In Louisiana
and east of the Mississippi, prices fell less than 50 cents. With these widespread declines, prices have
fallen below last year's levels by as much as 39 cents per MMBtu. For example, prices at the southern
California border are 39 cents or nearly 7 percent below last year's level,
while prices at the Henry Hubare 20 cents or 3 percent below last year's level.
At the NYMEX, the price of the futures contract for
July delivery at the Henry Hub decreased about 44 cents per MMBtu or nearly 7 percent
since last Wednesday to $6.082 per MMBtu.
The prices of the futures contracts for delivery in each of the
following 6 months fell about 33 to 42 cents or about 5 to 6 percent from last
Wednesday's level. With the spot price
declining at a faster rate than futures price, the differentials between the
spot price and the futures price increased over last week's level. The prices of the futures contracts for each
month through the remaining months of 2004 exceed the Henry Hub spot price by 3
to 57 cents per MMBtu. January and
February 2005 contracts traded at 70 and 65 cents, respectively, above the spot
price yesterday (June 9). With the
futures strip through next winter now trading at a significant premium to the
Henry Hub spot price, suppliers have increased economic incentives to inject
gas into storage.
Recent Natural Gas
Market Data
Estimated Average Wellhead Prices |
||||||
|
Nov-03 |
Dec-03 |
Jan-04 |
Feb-04 |
Mar-04 |
Apr-04 |
Price ($ 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 was 1,666 Bcf as of Friday, June 4, 2004, according to the EIA Weekly
Natural Gas Storage Report (See
Storage Figure). This is about 0.2 percent
below the 5-year average for the report week.
The implied net injection during the report week was 102 Bcf, marking
the first time during the current injection season that the implied net change
exceeded 100 Bcf. At 102 Bcf, net
injections were about 6 percent above the 5-year average net addition of 96 Bcf
for the week and about 18 percent below the injection of 125 Bcf reported for
the same week last year. Moderating
temperatures during the week ended June 5 likely contributed to the
higher-than-average rate of injections as temperatures in most regions of the
Lower 48 States were cooler than normal. (See Temperature Map)
(See Deviations Map)
Other
Market Trends:
Long-Term Decline in
Alberta's Gas Production and Exports: The Alberta Energy and Utilities Board (EUB)
released a report on June 3, 2004, stating that natural gas production fell by
2.5 percent in 2003, which marks a decline for the second year in a row.
Despite a 46 percent increase in drilling (12,000 successful drills in 2003
compared with 8,210 drills in 2002), the declining production trend is expected
to continue through the end of the forecast period in 2013. One of the reasons
for the decline in production cited by the EUB is that the new pools are smaller
and are exhibiting lower initial production rates, as well as steeper decline
rates. As the demand for natural gas increases in Alberta and production
declines, the volume available for export will decline. The Gas Resources
Preservation Act prescribes that
Natural
Gas Summary from the Short-Term Energy Outlook:
EIA projects that natural
gas prices will continue at high levels through the rest of 2004 (Short-Term Energy Outlook, June 2004).
Wellhead prices are expected to average $5.74 per MMBtu in the summer months
(June–August) and $6.00 per MMBtu in the fourth quarter, while composite spot
prices will likely stay well above $6.00 through December. Spot prices averaged
about $5.35 per MMBtu in the first quarter of the year but have been above
$6.00 since the beginning of May, as strong demand for natural gas coupled with
high petroleum prices has led to higher gas prices despite nearly normal
storage inventory levels. Storage stocks at the end of May were less than 1
percent below the 5-year average and 23 percent higher than last year at this
time. Overall in 2004, spot prices will likely average about $6.05 per MMBtu,
which is 13 percent higher than the 2003 average. In 2005, prices are expected
to decrease only slightly as production gains are expected to be relatively
low.
Natural gas production is
estimated to have increased by approximately 0.6 percent in 2003. Growth of about 0.9 percent in 2004 is
expected as new natural gas well completions, which totaled an estimated 20,000
in 2003, remain high at more than 24,000 wells per year for the next 2 years.
Because of apparently high decline rates from existing wells, these high
drilling rates are not expected to yield more than modest net gains in
Short-Term Natural Gas Market Outlook, June 2004
|
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|
History |
Projections |
||||
|
Mar-04 |
Apr-04 |
May-04 |
Jun-04 |
Jul-04 |
Aug-04 |
PRICES
($/MMBtu) |
|
|
|
|
|
|
Average Wellhead Price |
4.84 |
5.06 |
5.21 |
5.48 |
5.76 |
5.92 |
Residential Price |
9.07 |
9.88 |
10.71 |
11.79 |
12.43 |
12.83 |
Electric Utilities Price |
5.14 |
5.51 |
5.69 |
5.98 |
6.17 |
6.28 |
|
|
|
|
|
|
|
SUPPLY
(Trillion Cubic Feet) |
|
|
|
|
|
|
Total Dry Gas Production |
1.634 |
1.568 |
1.619 |
1.564 |
1.624 |
1.628 |
Net Imports |
0.250 |
0.237 |
0.259 |
0.248 |
0.264 |
0.265 |
Imports |
0.315 |
0.313 |
0.317 |
0.304 |
0.323 |
0.327 |
Exports |
0.065 |
0.057 |
0.057 |
0.056 |
0.060 |
0.062 |
Suppl. Gaseous Fuels |
0.005 |
0.004 |
0.005 |
0.005 |
0.006 |
0.006 |
Total New Supply |
1.889 |
1.809 |
1.883 |
1.817 |
1.894 |
1.898 |
|
|
|
|
|
|
|
Working Gas in Storage |
|
|
|
|
|
|
Opening |
1.163 |
1.028 |
1.227 |
1.601 |
1.993 |
2.305 |
Closing |
1.028 |
1.227 |
1.601 |
1.993 |
2.305 |
2.602 |
Net Storage Withdrawal |
0.135 |
-0.199 |
-0.374 |
-0.392 |
-0.312 |
-0.297 |
|
|
|
|
|
|
|
Total Supply |
2.024 |
1.610 |
1.509 |
1.425 |
1.582 |
1.601 |
|
|
|
|
|
|
|
Balancing Item |
0.116 |
0.148 |
0.052 |
0.009 |
0.012 |
-0.005 |
|
|
|
|
|
|
|
Total Primary Supply |
2.140 |
1.758 |
1.561 |
1.434 |
1.593 |
1.596 |
|
|
|
|
|
|
|
DEMAND
(Trillion Cubic Feet) |
|
|
|
|
|
|
Lease
& Plant Fuel |
0.096 |
0.092 |
0.095 |
0.093 |
0.096 |
0.096 |
Pipeline Use |
0.063 |
0.051 |
0.047 |
0.045 |
0.047 |
0.047 |
Delivered to Consumers |
1.981 |
1.615 |
1.419 |
1.297 |
1.450 |
1.452 |
Residential |
0.608 |
0.400 |
0.236 |
0.155 |
0.126 |
0.117 |
Commercial |
0.357 |
0.246 |
0.180 |
0.142 |
0.138 |
0.134 |
Industrial |
0.661 |
0.609 |
0.550 |
0.506 |
0.553 |
0.564 |
Electric Power |
0.355 |
0.359 |
0.454 |
0.494 |
0.634 |
0.638 |
Total Demand |
2.140 |
1.758 |
1.561 |
1.434 |
1.593 |
1.596 |
Source: Energy Information Administration, Short-Term
Energy Outlook, June 2004.