for week ending February 1, 2016 | Release date: February 2, 2016 | Previous weeks
Overview: Thursday,
February 2 (next release 2:00 p.m. on February 9, 2006)
Since
Wednesday, January 25, natural gas spot prices have increased at most market
locations in the Lower 48 States, with increases ranging between 20 and 67
cents per MMBtu or about 2 to 8 percent at most markets. On Wednesday, February 1, prices at the Henry
Hub averaged $8.71 per MMBtu, reflecting an increase of $0.21 per MMBtu or about
2 percent since Wednesday, January 25. The
futures contract for February delivery at the Henry Hub closed at $8.40 per
MMBtu on Friday, January 27, falling about 6 cents per MMBtu since Wednesday, January
25. By February 1, the futures contract
for March delivery at the Henry Hub increased about 9 cents per MMBtu or about 1
percent since Wednesday, January 25.Natural
gas in storage was 2,406 Bcf as of January 27, which is about 28 percent above
the 5-year average. Since January 25, the
spot price for West Texas Intermediate (WTI) crude oil increased $1.01 per
barrel, or about 1.5 percent to $66.61 per barrel or $11.48 per MMBtu.
Natural
gas prices increased at most market locations since Wednesday, January 25. Despite the continued prevalence of
warmer-than-normal temperatures in many major northern market locations,
falling temperatures and rising crude oil prices likely contributed to the
increase in natural gas prices since last Wednesday, January 25. The sharpest price increases in the Lower 48
States since January 25 occurred principally in the Midwest region, where
prices climbed about 43 cents per MMBtu or about 5 percent on average. The smallest increases since last Wednesday,
January 25, occurred principally in the Northeast region, where prices climbed
about 9 cents per MMBtu or about 1 percent on average, and decreased at several
selected market locations including the New York citygate. Despite the price increases since Wednesday,
January 25, natural gas prices have exhibited an overall pattern of decline
since mid-December, as prices at the Henry Hub have fallen $6.69 per MMBtu or
about 43 percent since they last peaked on December 13, 2005 at $15.40 per
MMBtu. The unseasonably mild
temperatures this winter undoubtedly contributed to this pattern of declining
natural gas prices, as natural gas prices declined despite rising crude oil
prices, which have increased more than 16 percent since December 19. During
the nomination period for natural gas for February 2006 (January 25 to 31),
bidweek prices decreased by more than 20 percent at most market locations, with
the bidweek price at the Henry Hub falling $2.96 per MMBtu, or about 26 percent
relative to the preceding month.
At
the NYMEX, the price of the futures contract for February delivery at the Henry
Hub closed at $8.40 per MMBtu on Friday, January 27, falling about $2.82 per
MMBtu, or about 25 percent since becoming the near-month contract on December
29.Since January 25, the March futures
contract climbed about 8 cents per MMBtu or 1 percent.Similarly, the 12-month futures strip (March
2006 - February 2007) increased about 11 cents per MMBtu or 1 percent since last
Wednesday, January 25.The 12-month
futures strip (February 2006 through January 2007) traded at a premium of $1.02
per MMBtu relative to the Henry Hub spot price, averaging $9.725 per MMBtu as
of Wednesday, February 1.
Estimated Average Wellhead Prices |
||||||
|
Aug-05 |
Sept-05 |
Oct-05 |
Nov-05 |
Dec-05 |
Jan-06 |
10.02/1.0237Price
($ per Mcf) |
7.68 |
9.76 |
10.97 |
9.54 |
10.02 |
8.66 |
Price
($ per MMBtu) |
7.48 |
9.50 |
10.68 |
9.29 |
9.76 |
8.43 |
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 decreased to 2,406 Bcf as of Friday, January 27, 2006, according
to EIA's Weekly Natural Gas Storage
Report (See
Storage Figure), which is the highest stock level for
this time of year since 1989. Storage
levels were 529 Bcf, or 28 percent, above the 5-year average, and 296 Bcf, or
14 percent, above the storage level at this time last year.Working gas in storage also exceeded the
5-year (2001-2005) maximum by 18 Bcf. This week's implied net change of 88 Bcf sharply contrasts with the
5-year average net withdrawal of 172 Bcf, and last year's net withdrawal of 193
Bcf. The below-average net withdrawal
likely resulted from continuing warmer-than-normal temperatures across much of
the United States during the report week, especially in major population
centers in the East and Midwest which account for much of the space heating
demand (See Temperature Maps). New England and the Middle Atlantic Census
Divisions experienced temperatures 24 percent and 25 percent
warmer-than-normal, respectively, as measured by the National Weather Service
heating degree days for the week ending January 26. Temperatures in the East and West North
Central Census Divisions were about 24 and 26 percent, respectively, above
average.Heating degree days in the
Lower 48 States as a whole were nearly 22 percent below normal.
Natural Gas Transportation Update: Several
natural gas pipeline companies gave updates this week on the operational status
of facilities that were severely damaged by Gulf Coast hurricanes this past
summer. Tennessee Gas Pipeline announced
that it was notified by BP America that it does not plan to resume operation of
the Grand Chenier gas processing plant, located in southwestern Louisiana. The plant had an operating capacity of 600
million cubic feet (MMcf) per day. Tennessee reported that about 135,000 dekatherms (Dth) per day can be
delivered temporarily through an interconnect at the Targa Seahawk pipeline
system and processed at the Lowry gas processing plant. Tennessee also announced that the Yscloskey
processing plant is currently operating at a capacity of 600 MMcf per day,
which is a utilization rate of about one-third of capacity. Gulf South Pipeline Company announced this
week that three more locations in Louisiana are operational after sustaining
damage from the hurricanes. One other
Gulf South facility had been previously verified as operational and one remains
offline. Tennessee Gas Pipeline
announced that current shut-in production on its 500 and 800 lines as a result
of damage from Hurricanes Katrina and Rita totals about 350,000 Dth/d. About
100,000 Dth/d is offline owing to pipeline damage and 250,000 Dth/d is shut in
owing to third-party damage. Lastly, according to the February 1 update from the
Louisiana Department of Natural Resources, only 19 of the 55 intrastate
pipeline operators in Louisiana have reopened at full or close to full capacity
following the hurricane.Sixteen
operators have experienced partial system shut-ins or flow, and 20 remain
shut-in.
Natural
Gas Rig Counts: The number of
rigs drilling for natural gas increased to 1,247 for the week ending January
27, according to Baker-Hughes Incorporated. The number of natural gas rigs is
about 17 percent greater than last year at this time, and about 44 percent
higher than the 5-year average for the report week. The share of natural gas
rigs drilling was about 84 percent of the total gas and oil rig count for the
report week. While the number of rigs drilling in the United States as a whole
is almost 4 percent higher than it was in mid-August, the number of rigs drilling
in the Gulf of Mexico has decreased by 30 percent during the same time.
According to the latest report, the number of rigs drilling in the Gulf of
Mexico during the week was 69, the lowest number since the 68 rigs drilling in
mid-1993. Since before the hurricanes, the number of natural gas rigs drilling
in the Gulf of Mexico has decreased 60 percent, while the number of oil rigs
drilling in the Gulf has almost doubled. As a result, the natural gas rigs
share of total rigs drilling decreased to 46 percent for the report week from
81 percent in mid-August. The emphasis on oil drilling in the Gulf reflects better
economic returns for crude oil compared with domestic natural gas prospects
amid the lingering infrastructure problems in the region.