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Natural Gas Weekly Update Archive

for week ending March 23, 2005  |  Release date:  March 24, 2005   |  Previous weeks

Overview: Thursday, March 24 (next release 2:00 p.m. on March 31)

Both spot and futures prices were relatively unchanged for the week (Wednesday to Wednesday, March 16-23). Colder-than-normal temperatures were offset by high volumes of working gas in storage remaining with only 8 days left in the traditional heating season. The Henry Hub spot price increased 3 cents per MMBtu since last Wednesday, trading yesterday (Wednesday, March 23) for $7.11. On the NYMEX, the settlement price for the futures contract for April delivery at the Henry Hub fell $0.054 per MMBtu from last Wednesday's level to $7.138 per MMBtu at yesterday's close of trading. Working gas in underground storage was 1,290 Bcf as of Friday, March 18, which is 21.9 percent above the previous 5-year (2000-2004) average. The spot price for West Texas Intermediate (WTI) crude oil decreased $7.07 per barrel, or about 12 percent, on the week to $49.43 per barrel or $8.52 per MMBtu.

 

Prices:

The spot price at the Henry Hub yesterday was $7.11 per MMBtu, exhibiting a net increase of 3 cents or about 0.4 percent since last Wednesday. Inventories of working gas in storage significantly larger than the 5-year average and the decline in oil prices helped offset the upward pressure on prices from colder-than-normal temperatures across most of the Lower 48 States. Spot prices overall generally traded within relatively small ranges during the past week, as most market locations experienced price fluctuations between a 7-cent decrease and a 16-cent increase. The lack of clear net movement in spot prices marks a departure from the upward trend that began in the latter part of February. The highest price increases were recorded at the CIG and Questar, Rocky Mountain market locations, both increasing by 22 cents. Prices in the Northeast exhibited a mixed pattern, decreasing by up to 5 cents at some market locations while increasing up to 14 cents at others. In the Midwest, the Chicago citygate price increased 3 cents to $7.16 per MMBtu, while the average price for all Midwest locations stood at $7.30 per MMBtu yesterday.

 

 

At the NYMEX, the price of the futures contract for April delivery at the Henry Hub decreased by $0.054 per MMBtu since last Wednesday, March 16, to $7.138 per MMBtu. Futures contract prices for April 2005 and May 2005 increased through Monday and declined slightly in trading the past 2 days. The settlement prices for contracts for delivery through the beginning of the next heating season (October 2005) declined between $0.002 and $0.063 per MMBtu on the week, while the contracts for November 2005 through April 2006 increased between $0.02 and $0.057 per MMBtu. The 12-month strip, which is an average of the monthly futures prices for the coming year, settled at $7.737 per MMBtu, only $0.001 per MMBtu lower on the week.

Recent Natural Gas Market Data

 

Estimated Average Wellhead Prices

 

Sept-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Price ($ per Mcf)

4.86

5.45

6.07

6.25

5.52

5.59

Price ($ per MMBtu)

4.73

5.30

5.91

6.08

5.37

5.44

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.

Storage:

Working gas in storage was 1,290 Bcf as of Friday, March 18, according to EIA's Weekly Natural Gas Storage Report (See Storage Figure). With about two weeks left in the heating season, storage levels were 21.9 percent above the 5-year average and 23.9 percent above last year's level for this week. The implied net withdrawal of 89 Bcf exceeded both the 5-year average withdrawal of 51 Bcf for this week and the 62 Bcf for this week last year. Colder-than-normal temperatures in almost every region across the Lower 48 States, which would have resulted in higher space heating demand, likely led to the above average withdrawals. Temperatures ranged up to 25 percent colder than normal in all regions except for the Pacific where temperatures were 33 percent warmer than normal as measured by the National Weather Service heating degree days (HDDs) for the week ending Thursday, March 17, 2005 (See HDD table). For the entire Lower 48, temperatures were 13 percent colder than normal or 16 percent colder than this week last year.

 

Other Market Trends:

MMS Gas Sale: The Minerals Management Service (MMS) announced on March 22, 2005, a sale of 485,400 million Btu (MMBtu) per day of royalty-in-kind gas to 13 companies. The spring sale conducted by MMS was concluded on March 10 for gas produced from federal leases in the Gulf of Mexico. The sales are for 7- or 12-month terms with delivery to 13 offshore pipelines beginning April 1, 2005. MMS will be delivering a total of approximately 625,000 MMBtu per day of royalty-in-kind gas, which includes volumes from an earlier sale concluded last year. Companies awarded sales packages represent large integrated producers, marketing companies, affiliates of local distribution companies/utilities and an industrial end user, according to MMS.

Summary:

Spot and futures price movements were mixed during the week as colder-than-normal temperatures were offset by a high volume of gas still in storage with only 8 days left in the traditional heating season. The spot price for West Texas Intermediate (WTI) crude oil decreased about 12 percent on the week to $49.43 per barrel or $8.52 per MMBtu. Natural gas stocks were 1,290 Bcf as of Friday, March 18, about 21.9 percent above the 5-year average.

Short-Term Energy Outlook