for week ending January 20, 2005 | Release date: January 21, 2005 | Previous weeks
Overview:
Friday, January 21 (next release 2:00 p.m. on January 27)
Since
Wednesday, January 12, natural gas spot prices have increased at most market locations
in the Lower 48 States. During the
period since Wednesday, January 12, prices at the Henry Hub climbed 37 cents,
or about 6 percent, to $6.26 per MMBtu. Yesterday (January 20), the price of the
NYMEX futures contract for February delivery at the Henry Hub settled at $6.308
per MMBtu, decreasing roughly 37 cents since last
Wednesday (January 12). Natural gas in
storage was 2,500 Bcf as of January 14, which is
about 16 percent above the 5-year average.
The spot price for West Texas Intermediate (WTI) crude oil increased
$0.55 per barrel, or about 1 percent, on the week to $47.01 per barrel or
$8.105 per MMBtu.
In concert with weather patterns in the Lower 48 States, prices declined in the West as temperatures moderated in the region, while spiking in the East as wintry weather moved into the region. West of the Rocky Mountains, prices varied within 10 cents per MMBtu of the level recorded on Wednesday, January 12, with prices in California rising less than 10 cents and prices in the Rocky Mountains region declining less than 10 cents at most market locations. In addition to limiting price movements, the relatively moderate temperatures from the West Coast through the Southeast allowed removal of an operational flow order along the Florida Gas Transmission system and led Kern River to report high linepack along its system. In the northern tier east of the Rockies, prices were significantly more volatile as prices climbed at most market locations. Price hikes in the Midwest and Midcontinent generally ranged up to 68 cents per MMBtu. Meanwhile, prices in the Northeast region climbed more than $10 per MMBtu at most locations. As one example, at the New York citygate, prices climbed $22.72 per MMBtu, or 353 percent, since Wednesday, January 12, to average $29.14 per MMBtu on Thursday, January 20. Recent below-normal temperatures have resulted in suspension of interruptible natural gas service to some customers in the Northeast, however there are no reports of firm service interruptions.
At
the NYMEX, the price of the futures contract for February delivery at the Henry
Hub increased about 37 cents per MMBtu since last
Wednesday, January 12, to $6.308 per MMBtu.
Similarly, prices for the futures contracts for the March 2005 contract
increased about 5 percent during the same period to $6.354 per MMBtu. Futures
contract prices for February 2005 and March 2005 are less than 10 cents above
the Henry Hub spot price, indicating that suppliers have reduced economic
incentives to hold working gas in storage.
Recent
Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Jul-04 |
Aug-04 |
Sept-04 |
Oct-04 |
Nov-04 |
Dec-05 |
Price
($ per Mcf) |
5.60 |
5.36 |
4.86 |
5.45 |
6.07 |
6.25 |
Price
($ per MMBtu) |
5.45 |
5.21 |
4.73 |
5.30 |
5.91 |
6.08 |
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 2,500 Bcf or 16.0
percent above the 5-year average as of Friday, January 14, 2005, according to
the EIA Weekly Natural Gas Storage Report. (See Storage Figure) Stock levels exceeded the year-ago levels by
197 Bcf, or 8.6 percent. The implied net withdrawal
during the week was 110 Bcf, or about 17 percent less
than the previous 5-year average withdrawal of 133 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.
According to the latest data from the National Weather Service, gas-customer
weighted heating degree days (HDD) were less than normal for the week ending
January 15. The weather was 19 percent warmer than normal for the United States
as a whole, and the Mid-Atlantic region was about 25 percent warmer than
normal. The East North Central region, which includes Chicago, was 20 percent
warmer than normal. New England was about 21 percent warmer than normal and the
Mountain Census Division experienced 6 percent warmer than normal weather. (See
Temperature Map) (See Deviations Map).
Other
Market Trends:
Recent LNG Developments: ConocoPhillips has
submitted a proposal to the U.S. Coast Guard for a building permit for the
Beacon Port Clean Energy Terminal in Federal waters, 56 miles south of
Louisiana. The new terminal in the Gulf of Mexico would have a throughput
capacity of 1.5 Bcf per day. Construction could begin
as soon as 2006 and the terminal is expected to be ready to accept deliveries
in 2010. A total of five U.S. LNG import terminals with 7.7 Bcf
per day of proposed peak sendout capacity have been
approved for construction along the Gulf Coast or in the Federal offshore Gulf
of Mexico, and at least ten other terminals have been
proposed for the Gulf, totaling at least 16 Bcf per
day of sendout capacity. Additionally, Kinder Morgan
Energy Partners is holding an open season to determine existing interest in a
new pipeline project along the Gulf Coast. The 77-mile pipeline would transport
regasified LNG from existing and proposed LNG
terminals along the coasts of Texas and Louisiana. In addition to an existing
30-inch diameter pipeline, another 23 miles of new pipeline would be built at a
cost of $89 million. The pipeline could become operational in 2009 and would be
capable of transporting 1 Bcf per day of gas. The
pipeline would originate near Sabine Pass, Texas, and would run south of Lake
Arthur in Louisiana.
Update
on Continuing Impacts of Hurricane Ivan:
Four months after hurricane Ivan caused a disruption of Gulf of Mexico gas and
oil production, production shut-ins remain at several platforms. As of January
18, the U.S. Minerals Management Service (MMS) reported that 559 million cubic
feet (MMcf) per day of natural gas and 141 thousand
barrels per day of oil production in the Federal offshore areas of the Gulf of
Mexico still remain shut in. The current amount of shut-in gas and oil
production is equivalent to about 5 percent and slightly more than 8 percent of
daily Federal offshore Gulf production, respectively. The cumulative
(9/11/04-01/18/05) shut-in gas production is estimated at 159 billion cubic
feet, while the cumulative shut-in oil production is estimated at about 40
million barrels. MMS reported that a total of 9 platforms and 1 rig were still
evacuated as of January 18. Shut-in production rates do not include production
lost owing to the destroyed platforms, which was estimated at 9 MMcf per day of natural gas and 3,100 barrels per day of
crude oil.
Summary:
Natural
gas prices increased at most market locations east of the Rockies since last
Wednesday, January 12, as a strong cold front moved into the northern portion
of the region. Working gas in storage
declined to 2,500 Bcf, which is about 16 percent
above the 5-year average.