for week ending January 5, 2005 | Release date: January 6, 2005 | Previous weeks
Overview:
Thursday, January 6 (next release 2:00 p.m. on January 13)
Since Wednesday, December 29, natural gas spot prices have decreased at most market locations in the Lower 48 States. For the week (Wednesday-Wednesday), prices at the Henry Hub declined 34 cents, or about 6 percent, to $5.84 per MMBtu. Yesterday (January 5), the price of the NYMEX futures contract for February delivery at the Henry Hub settled at $5.833 per MMBtu, decreasing roughly 57 cents since last Wednesday (December 29). Natural gas in storage was 2,698 Bcf as of December 31, which is about 12 percent above the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil decreased $0.28 per barrel, or less than 1 percent, on the week to $43.41 per barrel or $7.484 per MMBtu.
Moderate temperatures, the holiday-shortened week,
falling crude oil prices, and a favorable supply situation led to widespread
declines in natural gas spot prices in the Lower 48 States since last
Wednesday, December 29. With
warmer-than-normal temperatures prevailing throughout most of the Lower 48
States, prices fell more than 40 cents per MMBtu at
most market locations through Monday, January 3. However, wintry weather conditions moving
into the Lower 48 States sparked a rally in prices on Tuesday, January 4, that
reversed many of the price declines, leading to price increases at market
locations in the Rocky Mountains, West Texas, and Arizona regions. Since last Wednesday, December 29, price declines
were steepest at most locations in Louisiana and in the Northeast region, where
prices fell between 25 and 59 cents per MMBtu. Declines at most other market locations in
the California, Texas, Midwest, and Midcontinent regions in the same period were somewhat less pronounced. With these declines, prices fell below last
year's levels by about 5 to 10 percent at most market locations. As of January 5, 2004, prices at the Henry
Hub were nearly 7 percent below last year's level, falling below the $6 mark
during the week for the first time since the last week of November 2004.
At
the NYMEX, the price of the futures contract for February delivery at the Henry
Hub decreased about 57 cents per MMBtu since last
Wednesday, December 29, to $5.833 per MMBtu. On
Monday, January 3, the futures price for the near-month contract fell to $5.790
per MMBtu, its lowest level since September
2004. In addition, the February 2005
contract fell to its lowest level since February 25, 2004. Futures contract prices for February 2005 and
March 2005 are within 10 cents of the Henry Hub spot price.
Recent Natural Gas
Market Data
Estimated Average Wellhead Prices |
||||||
|
Jun-04 |
Jul-04 |
Aug-04 |
Sept-04 |
Oct-04 |
Nov-04 |
Price
($ per Mcf) |
5.85 |
5.60 |
5.36 |
4.86 |
5.45 |
6.07 |
Price
($ per MMBtu) |
5.69 |
5.45 |
5.21 |
4.73 |
5.30 |
5.91 |
Note:
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 decreased to 2,698 Bcf as
of Friday, December 31, 2004, according to EIA's Weekly Natural Gas Storage Report. (See
Storage Figure) Inventories now stand
at 11.5 percent, or 279 Bcf, above the 5-year average
of 2,419 Bcf. The implied 151 Bcf
withdrawal reflected a lower drawdown rate than that of the preceding report
week. Storage activity during the week ending December 31 was affected by the
weather, which for the country as a whole was approximately 17 percent warmer
than normal, as measured by heating degree days (HDDs)
published by the National Weather Service. A decrease in HDDs
was recorded in each region across the United States for the report week, with
the exception of New England. (See Temperature Map)
(See Deviations Map)
Other
Market Trends:
Natural
Gas Rig Count: The number of rigs drilling for natural gas
decreased by 12 to 1,058 rigs for the week ending December 31, 2004, according
to Baker-Hughes Incorporated. Despite
the decrease in the number of natural gas rigs during the last week of 2004,
the average for the year was 1,025 rigs, which is a record high for the period
since 1987 when Baker-Hughes first reported rigs by fuel type. This is an increase of 17.5 percent from the
872 gas rigs in 2003. Since the beginning
of May 2004, the natural gas rig count was consistently above 1,000, which is
the longest sustained period at such levels.
The 34 weeks of 2004 in which gas rigs exceeded 1,000 is more than
double the 15-week period for 2001. Rigs
drilling for gas accounted for 86 percent of total rigs in 2004, compared with
84.4 percent in 2003.
Summary:
Natural
gas prices declined at most market locations east of the Rockies since last
Wednesday, December 29, falling below last year's levels. Working gas in storage declined to 2,698 Bcf, which is about 12 percent above the 5-year
average.