for week ending May 25, 2005 | Release date: May 26, 2005 | Previous weeks
Overview:
Thursday, May 26 (next release 2:00 p.m. on June 2)
Since
Wednesday, May 18, natural gas spot prices have declined at most market
locations in the Lower 48 States, while climbing in the Southwestern
region. For the week
(Wednesday-Wednesday), prices at the Henry Hub decreased 17 cents, or nearly 3
percent, to $6.33 per MMBtu. Yesterday (May 25), the price of the NYMEX
futures contract for June delivery at the Henry Hub settled at $6.315 per MMBtu, decreasing roughly 8 cents, or about 1 percent,
since last Wednesday. Natural gas in
storage was 1,692 Bcf as of May 20, which is about 22
percent above the 5-year average. The
spot price for West Texas Intermediate (WTI) crude oil increased $3.38 per
barrel, or about 7 percent, on the week to $50.37 per barrel or $8.684 per MMBtu.
Spot
prices decreased since last Wednesday, May 18, at most market locations outside
the Southwestern region of the Lower 48 States.
Moderating temperatures in the Mid-continent, Northeast, Southeast, and
northern California regions eased demand for natural gas, contributing to price
declines, ranging between 10 and 20 cents per MMBtu
at most market locations. The Midwest
and Midcontinent regions had the steepest declines
with prices falling between 20 cents and 34 cents per MMBtu
at some market locations. Meanwhile,
soaring temperatures in the Southwest (including southern California, parts of
the Rocky Mountains region, and West Texas) contributed to climbing prices in
most regional markets. Prices at Northwest-South of Green River rebounded $1.71
from a 2-day low to average $5.12 per MMBtu on
Thursday, May 20, as the scheduled outage of the Moab (Utah) Compressor Station
came to an end. Warmer weather moving
into central and southern California led to SoCal and
Pacific Gas and Electric (PG&E) lifting operational flow orders (OFOs) on Monday, May 23, contributing to higher prices in
the Rocky Mountains and West Texas regions.
As of May 25, 2005, natural gas prices at most market locations in the
Lower 48 States are about 5 to 10 percent below last year's levels. At $6.33 per MMBtu,
prices at the Henry Hub are 37 cents per MMBtu, or 6
percent, below last year's level at this time.
This is the lowest level for the Henry Hub spot price since February
2005.
At
the NYMEX, the price of the futures contract for June delivery at the Henry Hub
decreased about 8 cents per MMBtu or 1 percent since
last Wednesday, May 18, to $6.315 per MMBtu.
Similarly, prices for the futures contracts through the remainder of 2005
injection season (July 2005 through October 2005) also decreased about 8 cents
per MMBtu or about 1 percent. Futures prices remained
in contango, as prices for the futures contracts for
July 2005 through October 2005 ranged between 4 and 20 cents higher than the
Henry Hub spot price, with successively higher differentials in each succeeding
month. Despite the relatively narrow
differentials through the injection season months, the 12-month futures strip
(June 2005 through May 2006) is trading at a 67-cent premium to the Henry Hub
spot price. This is driven primarily by
the large differentials of the futures prices for the heating season months
with respect to the Henry Hub spot price, as futures contract prices continue
to exceed the spot price by about $1.33 per MMBtu on
average during the 5-month period (November 2005 through March 2006). The steep contango
in the natural gas futures market throughout the heating season months provides
suppliers significant incentives to inject natural gas into storage.
Recent
Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Nov-04 |
Dec-04 |
Jan-05 |
Feb-05 |
Mar-05 |
Apr-05 |
Price
($ per Mcf) |
6.07 |
6.25 |
5.52 |
5.59 |
5.98 |
6.44 |
Price
($ per MMBtu) |
5.91 |
6.08 |
5.37 |
5.44 |
5.82 |
6.27 |
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 1,692 Bcf, or 21.8 percent above the 5-year average, as of
Friday, May 20, according to EIA's Weekly
Natural Gas Storage Report. (See Storage
Figure) At 93 Bcf,
the weekly implied net change exceeded the 5-year average by about 15 percent
and outstripped last year's net in injection by about 6 percent. This led to an increase in the year-on-year
storage differential, as stock levels were 228 Bcf or
about 16 percent above year-earlier levels.
Moderate temperatures across much of the lower 48 States likely
contributed to the above-average injection. (See
Temperature Maps) Another factor driving the above-average injection likely included the
contango in the natural gas futures market, as the
12-month strip of natural gas futures prices continued to trade at a 67-cent
premium to the Henry Hub spot price.
Other
Market Trends:
New
Report Increases Estimated Conventional Natural Gas Resources in Alberta: According to a joint report from Canada's National
Energy Board (NEB) and the Alberta Energy and Utilities Board (AEUB), the
amount of recoverable conventional natural gas from Alberta is estimated at 223
trillion cubic feet (Tcf), or 7 percent larger than
the 2004 estimate from the NEB and 12 percent more than the last estimate by
AEUB. The key reason for the increase is
enhanced knowledge of the territory gained as a result of increased drilling
since 1992. In the report, estimates of
ultimate marketable conventional natural gas range between 205 Tcf and 253 Tcf with 223 Tcf as the base case.
Of the estimated 223 Tcf, only 62 Tcf or 28 percent remains undiscovered. This estimate reflects only resources in
known geologic plays. If new conceptual plays are
discovered in the future, the resources for those plays would be added to the
current estimate. The study also
excludes unconventional gas resources, of which coalbed
methane deposits are expected to comprise 500 Tcf of
gas in place. Alberta continues
to be the main source of natural gas for Canadian gas demand, and remains an
integral supplier of natural gas exported to the United States. In 2004,
natural gas imports from Canada totaled 3.6 Tcf,
accounting for almost 85 percent of the natural gas imported to the United
States.
Summary:
Natural
gas spot prices decreased at most market locations outside of the Southwestern
region of the Lower 48 States since last Wednesday, May 18. Prices for the futures contracts for the
upcoming heating season (November 2005 through March 2006) continued to trade
at a significant premium to the Henry Hub spot price. Working gas in storage was 1,692 Bcf, which is about 22 percent above the 5-year
average.