|Home > Natural Gas > Natural Gas Weekly Update|
|Weekly Natural Gas Storage|
|Residential Gas Prices: Information for Consumers|
|U.S. Natural Gas Imports and Exports: Issues and Trends 2003|
|U.S. LNG Markets and Uses: June 2004|
|Natural Gas Restructuring|
|The Global Liquefied Natural Gas Market: Status and Outlook|
|Natural Gas Market Centers and Hubs|
|U.S. Natural Gas Pipeline and Underground Storage Expansions in 2003|
|Previous Issues of Natural Gas Weekly Update|
|Natural Gas Homepage|
Overview: Thursday, December 9 (next release 2:00 p.m. on December 16)
Both natural gas spot and futures prices fell significantly over the week (Wednesday to Wednesday, December 1-8), as temperatures in most major gas-consuming areas of the nation were above normal most days, with differences reaching double digits in the past several days in many locations east of the Mississippi River. The Henry Hub spot price fell 79 cents per MMBtu, or nearly 12 percent, since last Wednesday (December 1) trading yesterday (Wednesday, December 8) at $5.98. The NYMEX futures contract for January 2005 delivery declined by a similar amount for the week (73 cents per MMBtu), settling yesterday) at $6.683 per MMBtu, or about 10 percent less than last Wednesday’s settlement price ($7.413). EIA reported that inventories were 3,211 Bcf as of Friday, December 3, which is 12 percent greater than the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil fell by over $3 per barrel for the second week in a row, declining in 4 of 5 trading days and ending the week down $3.60 per barrel ($0.62 per MMBtu), at yesterday’s price of $41.96 ($7.23). Since reaching its record-high spot price of $56.37 per barrel on October 26, the WTI spot price has declined in 5 of the 6 ensuing weeks, with yesterday’s price representing a nearly26 percent drop in value.
Spot prices declined in all markets on the week, with declines ranging from over 50 cents to nearly $1.25 per MMBtu, as warmer-than-normal temperatures that prevailed in the middle of the country over the weekend (December 4-5) spread east and west during the past three days. By yesterday (Wednesday, December 8) the entire nation, with the exception of the northern tip of Maine, was experiencing unseasonably warm temperatures. The warm-up had its greatest impact on prices in the Rockies and the West Coast. Average prices at California and Rocky Mountain market locations experienced the largest drops in the nation, falling by roughly $1.10 per MMBtu on the week—a decline of 15-16 percent. Elsewhere, parts of the Midwest and much of the East Coast and Southeast experienced chilly nights on Friday and Saturday (December 3-4). This, coupled with the resumption of normal work-week levels of demand on Monday, contributed to slightly greater Monday price increases at relevant market locations and to continuing but smaller increases on Tuesday. Thus, overall weekly price declines were smaller in these markets, averaging about 72 cents per MMBtu in Gulf/Louisiana locations, 77 cents at Northeast locations, and 86 cents in the Midwest. As of trading yesterday, the spot price for delivery to New York citygates had fallen 81 cents per MMBtu on the week, or nearly 11 percent, to $6.62. Likewise, the Chicago citygate price fell 92 cents, to $6.10 per MMBtu, a decline of a little over 13 percent.
On the New York Mercantile Exchange (NYMEX), futures prices fell across the board by relatively large amounts for the second straight week, significantly reducing the premium to the Henry Hub spot price. The near-month contract (for January delivery) declined for the week by $0.730, as it settled yesterday (December 8) at $6.683 per MMBtu. Yesterday’s and Tuesday’s price levels for futures contract for delivery through this heating season were the lowest since September 20. The February and March contracts declined $0.665 and $0.640 per MMBtu, respectively, to settle yesterday at $6.828 and $6.753. Over the past two weeks the basis differential between the Henry Hub spot price and these three contracts has fallen fairly dramatically, from close to or more than $2 most days throughout November to an average of $0.601, $0.710, and $0.623 per MMBtu, respectively, for the January through March contracts.
Recent Natural Gas Market Data
Working gas in storage stood at 3,211 Bcf as of Friday, December 3, according to EIA’s Weekly Natural Gas Storage Report. This is 12 percent greater than the previous 5-year (1998-2003) average, and nearly 8 percent greater than last year’s level at this point in the heating season.(See Storage Figure) The implied net withdrawal for the week is 88 Bcf, which is 13 Bcf, or about 13 percent, less than the previous 5-year average for the week. It is also 23 Bcf, or about 21 percent, less than net withdrawals during this week last year. On a regional basis, implied net withdrawals were slightly higher than the 5-year average for the Producing region (24 Bcf vs. 23 Bcf), but were most significant in the West region, where implied net withdrawals were more than double the average. Temperatures were colder than normal during the week of the storage report throughout most of the western states and into Texas and the Gulf Coast states, with the greatest deviations from normal occurring in most of California and the Rocky Mountain states (See Temperature Map) (See Deviations Map). According to the latest data from the National Weather Service, gas-customer weighted heating degree days were 29.4 percent and 22.1 percent greater than normal, respectively, for the Pacific and Mountain Census divisions. Compared with last year, HDDs were 46.9 percent and 46.0 percent greater than normal for these divisions. Further, the West South Central division was 11.0 percent colder than normal and 19.4 percent colder than last year, as measured by HDDs.
Other Market Trends:
LNG Imports Increase: Liquefied natural gas (LNG) imports in the first 10 months of 2004 increased by about 30 percent over year-earlier levels, to the gaseous equivalent of 547.2 billion cubic feet (Bcf), according to data from the Office of Fossil Energy, U.S. Department of Energy. The Dominion-owned Cove Point LNG and Trunkline LNG terminals have the largest regasification capacity of the four operating terminals in the Lower 48 States. The Cove Point facility, located on the Maryland coast of the Chesapeake Bay, received 168.5 Bcf in the 10-month period, while Trunkline LNG, near Lake Charles, Louisiana, received the second largest amount at 149.7 Bcf. Tractebel's Everett facility, located near Boston, Massachusetts, received 142.4 Bcf, and El Paso's Southern LNG terminal, located on Elba Island, Georgia, received 86.6 Bcf. The Cove Point terminal contributed the most to the increase, as the volume it received increased from 32.2 Bcf in 2003 (January through October) to 168.5 Bcf during the same time period in 2004. The source country for the largest volume was Trinidad and Tobago, which supplied slightly more than 380 Bcf from the Point Fortin plant. Algeria was the source of 103.5 Bcf, while Malaysia supplied approximately 20 Bcf. EIA projects that about 650 Bcf of LNG will be imported in 2004.
EIA Releases Annual Energy Outlook 2005: According to the Energy Information Administration’s (EIA) newly released annual long-term forecast, Annual Energy Outlook 2005 (AEO2005), natural gas prices are higher and demand grows more slowly than in previous projections. Total natural gas supply, including contributions from Alaska and liquefied natural gas (LNG) imports, is projected to increase at an average annual rate of 1.4 percent to 30.6 trillion cubic feet (Tcf) in 2025. This is approximately 0.8 Tcf less than forecast in the AEO2004. Domestic production is expected to increase from 19.1 Tcf in 2003 to 21.8 Tcf in 2025, which is an average increase of 0.6 percent per year and 2.2 Tcf less than last year’s forecast. The decrease is due, in part, to lower conventional onshore production because of slower reserve growth, fewer new discoveries, and higher exploration and development costs. LNG imports at the four existing LNG terminals (Everett, MA; Cove Point, MD; Elba Island, GA; and Lake Charles, LA) are all expected to increase through 2007. Additionally, the AEO2005 forecasts that new terminals will be constructed. Total U.S. imports will account for more than 28 percent of supply in 2025, or 8.7 Tcf. Average natural gas wellhead prices are projected to decline from $4.98 per thousand cubic feet (Mcf) in 2003 to $3.64 in 2010, increasing thereafter to $4.79 in 2025, which is more than 30 cents per Mcf higher than last year’s projection. Total demand for natural gas is projected to increase at an average annual rate of 1.5 percent from 2003 to 2025, from 22.0 Tcf in 2003 to 30.7 Tcf in 2025, primarily as a result of increasing use for electricity generation and industrial applications, which together account for about 75 percent of the projected growth in natural gas demand from 2003 to 2025.
EIA To Solicit Public Comment on Weekly Natural Gas Storage Revision Policy: The Energy Information Administration (EIA) announced on December 8, 2004, that it will publish a Federal Register notice in January 2005 soliciting public comment on the policy for revisions to Weekly Natural Gas Storage Report (WNGSR) estimates. The decision to seek public comment follows the revision of WNGSR data for the week ending November 19, 2004. That revision was made on December 2, 2004, in accord with the existing revision policy. The current policy was established in November 2002 on the basis of public comments made in response to a previous Federal Register notice. In addition to considering changes to its revision policies, EIA is taking a number of other actions to assure the quality of weekly natural gas storage data. First, EIA has contacted respondents to re-emphasize the importance of accurate, timely data submissions. Second, EIA is continuing ongoing efforts to improve its own quality processes and systems. Finally, EIA will consider, on a case-by-case basis, adjustments to the date and timing of WNGSR data releases during holiday weeks.
With unseasonably warm temperatures blanketing the nation and storage levels continuing to exceed the 5-year average by a wide margin, spot and futures prices declined significantly. The bases of the futures contract prices for the respective heating-season months to the Henry Hub cash price have declined markedly from November levels.
Specialized Services from NEIC
|Renewables | Alternative Fuels | Prices | States | International | Country Analysis Briefs|
|Environment | Analyses | Forecasts | Processes | Sectors|