for week ending March 30, 2005 | Release date: March 31, 2005 | Previous weeks
Overview:
Thursday, March 31 (next release 2:00 p.m. on April 7)
With
the traditional heating season coming to a close, temperatures moderated this
week and spot price changes were relatively small at most trading locations.
For the week (Wednesday-Wednesday, March 23-30), the spot price at the Henry
Hub increased 6 cents per MMBtu, or less than 1
percent to $7.17. In contrast to the mixed price patterns on the spot markets,
the prices of futures contracts at the New York Mercantile Exchange (NYMEX) for
delivery through next heating season all rose on the week. After rising 32.4
cents per MMBtu on Tuesday, March 29, the day of
expiration, the April NYMEX contract's monthly settlement price was $7.323. The
futures contract for May delivery at the Henry Hub yesterday (Wednesday, March
30) settled at $7.460 per MMBtu, which is 20.5 cents
more than last Wednesday's price. Natural gas in storage decreased to 1,239 Bcf as of March 25, which is 19.9 percent above the 5-year
average. The spot price for West Texas Intermediate (WTI) crude oil fell $4.53
per barrel or about 9 percent since last Wednesday to $53.96 per barrel or
$9.30 per MMBtu.
Price
changes in the spot market were mixed on the week as seasonably moderate
temperatures likely limited space heating demand in consuming markets, while
concerns over long-term gas supply trends continued to provide upward pressure
on prices. Price increases were generally less than 15 cents per MMBtu along the Gulf Coast and in West Texas since last
Wednesday, March 23. After a 23-cent per MMBtu
increase to $7.17 yesterday, the net change in the spot price at the Henry Hub
on the week was 6 cents per MMBtu. Price declines of
up to 23 cents per MMBtu occurred in the Northeast,
where the first week of spring brought warmer temperatures. At the New York citygate off Transcontinental Gas Pipe Line, the spot price
decreased 9 cents per MMBtu to $7.65. The basis
differential between the Northeast and the Gulf-area producing markets has continued
to drop from the relatively high levels observed in the winter closer to
shoulder-season norms of about 45-60 cents per MMBtu.
Prices also generally declined for the week in the Midcontinent
and Rockies producing regions. At Ventura, Iowa, the price for next day
delivery off Northern Natural Gas fell 11 cents per MMBtu
to $6.75. The price for deliveries at the trading point in Opal, Wyoming, fell
4 cents to $6.55 per MMBtu.
At
the NYMEX, the April contract expired on Tuesday, March 29, at $7.323 per MMBtu, after gaining slightly more than 32 cents in the
final day of trading. During its tenure as the near-month contract, the April
contract gained nearly 87 cents per MMBtu, or 13
percent, in value. The final April 2005 contract price exceeded the April 2004
contract price by approximately $1.96 per MMBtu, or
36 percent. The May 2005 contract gained 20.5 cents per MMBtu
on the week, settling at $7.460 yesterday. The closing price for the new
near-month contract was nearly 29 cents per MMBtu
higher than the price commanded in the spot market. In fact, futures prices
show an increasing trend through the January 2006 contract, the price for which
ended trading yesterday at $8.603 per MMBtu. The
January 2006 contract as of yesterday was priced $1.43 per MMBtu
higher than gas in the current spot market. The 12-month strip,
or the average price for contracts over the next year (May 2005 through April
2006), increased 20.0 cents per MMBtu to end the week
at approximately $7.93.
Recent
Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Sept-04 |
Oct-04 |
Nov-04 |
Dec-04 |
Jan-05 |
Feb-05 |
Price
($ 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. |
Working
gas in underground storage decreased to 1,239 Bcf as
of Friday, March 25, according to EIA's Weekly Natural Gas Storage Report.
Inventories now stand 19.9 percent, or 206 Bcf, above
the preceding 5-year (2000-2004) average of 1,033 Bcf (See Storage Figure), and they are 222 Bcf, or 21.8 percent,
higher than last year's level of 1,017 Bcf at this
time. The implied net withdrawal for the week was 51 Bcf,
which is the smallest net withdrawal in March 2005 and the smallest since a net
withdrawal of 5 Bcf for the week ended November 26,
2004. However the implied net change for the week ended March 25 is still
considerably higher than the 5-year average implied net change of -24 Bcf and last year's -25 Bcf for
the same week. During the week ending March 24, 2005, the weather for the
country as a whole was slightly more than 7 percent colder than normal, as
measured by the National Weather Service heating degree days (HDD), and almost
16 percent colder than last year. In the East North Central region, which
includes Chicago and other Midwest population centers with significant space
heating demand, temperatures were over 10 percent colder than normal and about
8 percent colder than last year. The Middle Atlantic experienced temperatures
that were over 8 percent colder than normal, but about 10 percent warmer than
last year during the same time. (See HDD table)
The colder-than-normal temperatures that prevailed across most of the Lower 48
States maintained some space-heating demand, influencing withdrawals from the
storage facilities.
Other
Market Trends:
MMS Issues Proposed Notice of Lease Sale
196:
The Minerals Management Service (MMS) announced in Monday's Federal Register the availability of
Proposed Notice of Lease Sale 196, an offshore oil and gas lease sale in the
western Gulf of Mexico. The proposed
lease sale, scheduled for August 17, 2005, covers 20.3 million acres in the
western Gulf of Mexico outer continental shelf planning area offshore Texas and
in deeper waters offshore Louisiana.
This area consists of approximately 3,754 unleased
blocks located 5 to 357 kilometers (approximately 3 to 222 miles) offshore and
in water depths ranging from 8 to 3,100 meters (approximately 26 to 10,170
feet). According to MMS, the lease sale
could result in the production of 136 to 262 million barrels of oil and 0.81 to
1.44 trillion cubic feet of natural gas.
One provision included in this lease sale is a recently proposed
increase in base rental rates. The
revised rates would increase from $5.00 to $6.25 per acre for blocks in water
depths of less than 200 meters (approximately 656 feet) and from $7.50 to $9.50
per acre for blocks in water depths of 200 meters or deeper.
Summary:
Spot
prices this week were generally little changed at most market locations in the
Lower 48 States. For the week, the price at the Henry Hub increased less than 1
percent to $7.17 per MMBtu. Futures prices increased
generally about 20 cents for delivery months over the next year. Net storage
withdrawals were 51 Bcf, leaving stocks at 19.9
percent above the 5-year average.