for week ending January 12, 2005 | Release date: January 13, 2005 | Previous weeks
Overview:
Thursday, January 13 (next release 2:00 p.m. on January 21)
Moderate
temperatures throughout most of the country kept natural gas spot prices close to
those of last week at most trading locations in the Lower 48 States. For the
week (Wednesday-Wednesday, January 5-12), the price for next-day delivery at
the Henry Hub rose 5 cents per MMBtu, or about 1 percent to $5.89. The NYMEX
futures contract for February delivery at the Henry Hub yesterday (January 12)
settled at $5.943 per MMBtu, which was 11 cents less than last Wednesday's
price. Natural gas in storage decreased to 2,610 Bcf as of January 7, which is
about 14.0 percent above the 5-year average. The crude oil price continues to
provide upward pressure on energy prices. The spot price for West Texas
Intermediate (WTI) crude oil moved up $3.05 per barrel or about 7 percent since
last Wednesday to $46.46 per barrel or $8.01 per MMBtu.
The
Henry Hub spot price generally declined from mid-December to early January as
temperatures were moderate and space-heating demand was weak. The reversal to the
late December trend, which began last week, continued as updated forecasts
showed that a massive cold front is expected in the Midwest and Northeast later
this week. The Henry Hub price rose 38 cents per MMBtu to $5.89 in Monday
trading, but drifted lower in the ensuing two trading sessions and ended the
week at $5.89, which was a net gain of 5 cents per MMBtu. At other Gulf region
pricing points, prices generally gained 8 cents per MMBtu or less given the
prevailing relatively moderate conditions of this early January. At the New
York citygate off Transcontinental Gas Pipe Line, the spot price decreased 19
cents per MMBtu to $6.42. As a result, the basis differential between the
Northeast and Gulf-area producing region markets has dropped from relatively
high levels in mid-December closer to historical norms of about 50-60 cents per
MMBtu. In the Rockies and California, mild temperatures resulted in price
declines of 13 cents per MMBtu or less since last Wednesday. The price for
deliveries at the trading point in Opal, Wyoming, fell 5 cents to $5.45 per
MMBtu.
At the NYMEX, the futures
contract for February delivery settled yesterday at $5.943 per MMBtu, which is
11 cents higher on the week. Price movements in the futures market during the
past week were similar to spot market changes, with small decreases in value
during three trading sessions, but larger gains in the other two. The price for
the March contract gained 10.3 cents on the week, rising to just over $6.00 per
MMBtu. During the week, the value of contracts for gas deliveries further into
the future also fluctuated closely with the February and March contract prices.
In fact, yesterday's closing price of $6.21 per MMBtu for the 12-month strip,
which is the average of futures prices for the coming year, represented an
increase of 11 cents per MMBtu on the week, matching the increase for the
near-month contract.
Recent Natural Gas
Market Data
Estimated Average Wellhead Prices |
||||||
|
Jun-04 |
Jul-04 |
Aug-04 |
Sept-04 |
Oct-04 |
Nov-04 |
Price
($ 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 storage was an estimated 2,610 Bcf as of Friday, January 7, 2005,
according to the EIA Weekly Natural Gas Storage Report. This level of
underground storage inventory is 321 Bcf, or 14.0 percent, more than the 5-year
average for the report week and 152 Bcf, or 6.1 percent, higher than the level
last year.(See Storage
Figure) The implied net withdrawal
during the report week was 88 Bcf, which is considerably lower than the
interpolated 5-year average withdrawal for the week of 165 Bcf.
Warmer-than-normal temperatures across much of the Lower 48 States likely
contributed to the relatively low net withdrawals of natural gas from storage.
As measured by heating degree days (HDDs) for the week ending January 8, the
weather was 19 percent warmer than normal for the United States as a whole,
according to the National Weather Service. The above-normal temperatures were
especially pronounced in major gas-consuming markets during the report
week. For example, the weather for the
Mid-Atlantic region was about 26 percent warmer than normal. The East North
Central region, which includes Chicago, was 20 percent warmer than normal (See Temperature Map)
(See Deviations Map).
Other
Market Trends:
EIA Releases a Summary of Major Legislative and Regulatory
Actions (1935 — 2004): The Energy Information Administration (EIA)
on January 7, 2005, published a summary of key Federal legislative and
regulatory actions relating to the natural gas industry and markets entitled, Natural
Gas: Major Legislative and Regulatory Actions (1935 - 2004). Regulatory oversight of the interstate
natural gas market began in the 1930's with concerns about the possible
exercise of monopoly power by interstate pipeline companies. The natural gas market has changed
significantly since the 1930's and most importantly since the 1970's, as
legislative and regulatory initiatives have combined with market forces to form
a more competitive natural gas industry.
The web page presents a chronology of some of the key Federal
legislative and regulatory actions that have helped reshape the natural gas
market, with particular emphasis on policy directives during the past 26 years. The linked files provided on the web site
provide brief descriptions of specific legislation, regulations, or policies,
and their impacts on the natural gas market.
EIA Requests Comment on WNGSR Revision Policy: On Friday,
January 7, the Energy Information Administration (EIA) issued a Federal Register notice soliciting
public comments on its policy for revisions to the Weekly Natural Gas
Storage Report (WNGSR). Comments are due by February 7, 2005. The decision
to look for public comment follows the revision of WNGSR data for the week
ending November 19, 2004. Those estimates were released on November 24, 2004,
and revised in the next regularly scheduled WNGSR issue on December 2, 2004, in
accord with the WNGSR revision policy established in 2002. The current policy was established on the
basis of public comments made in response to a previous Federal Register
notice. However, EIA is now reconsidering its policy. In its current Federal Register notice, EIA outlines several
important issues. These include the size of a revision justifying a revised
WNGSR release, the problem of equal and adequate notification of an upcoming
revision, and the timing of revisions in light of government and market hours
of operation. EIA has a copy of the Notice, including information about how to
submit comments, on its web site at: http://www.eia.doe.gov/oss/WNGSR-Revision-Policy-for-Comments-Jan7-2005.pdf.
Summary:
Spot
prices at most market locations in the Lower 48 States were little changed in
comparison with the previous week as moderate temperatures dominated most of
the country. For the week, the price at the Henry Hub increased 1 percent to
$5.89 per MMBtu. Futures prices increased generally about a dime for delivery
months over the next year. Storage withdrawals were 88 Bcf, leaving stocks at
14 percent above the 5-year average.