for week ending March 1, 2016 | Release date: March 2, 2016 | Previous weeks
Overview: Thursday, March 2 (next release 2:00 p.m. on March 9, 2006)
Since
Wednesday, February 22, natural gas spot prices have decreased at all market
locations in the Lower 48 States, with decreases exceeding $1 per MMBtu at most
locations. On Wednesday, March 1, the
spot price at the Henry Hub averaged $6.62 per MMBtu, declining about 92 cents
per MMBtu or about 12 percent during the week (Wednesday–Wednesday). The futures contract for April delivery at
the Henry Hub settled at $6.733 per MMBtu yesterday (March 1), falling about 70
cents per MMBtu or about 9 percent since the previous Wednesday. Natural gas in storage was 1,972 Bcf as of
February 24, which is about 48 percent above the 5-year average. Since February 22, the spot price for West
Texas Intermediate (WTI) crude oil increased $2.98 per barrel, or about 5
percent to $62.01 per barrel or $10.691 per MMBtu.
Natural gas prices decreased by more than $1 per MMBtu
at most market locations in the Lower 48 States as temperatures moderated
following the weekend. Another factor
that likely contributed to the lower prices was increasing reliance on
withdrawals of natural gas from storage, as mandatory withdrawal provisions in
many storage contracts loom with less than a month remaining in the 2005-2006
heating season. These mandatory
withdrawal provisions provide incentives for owners of natural gas in storage
to draw down their working gas inventories to avoid financial penalties for
failing to reduce gas in storage to stipulated volumes. The price declines were geographically
widespread, with prices falling by at least 99 cents per MMBtu on average in
each region outside the Northeast. The
only price increases since last Wednesday, February 22, occurred in New
England, where prices climbed between 8 and 39 cents per MMBtu.Nevertheless, prices in the Northeast region,
which includes New England, declined by 39 cents per MMBtu on average. The largest declines occurred in the West
Texas region where prices fell by $1.35 per MMBtu on average. The widespread price decreases continues the
trend of declining prices that has prevailed in natural gas markets since
mid-December 2005, when the price at the Henry Hub hit $15.40 per MMBtu. At $6.62 per MMBtu as of Wednesday, March 1,
prices at the Henry Hub are at their lowest level since June 1 2005, and 2
cents below last year's level. During
the nomination period for natural gas for March 2006 (February 22 -28), bidweek
prices decreased by 5 to 20 percent relative to the preceding month at most
market locations, with the bidweek price falling about $1.34 per MMBtu or 16
percent at the Henry Hub.
At
the NYMEX, the price of the futures contract for April delivery at the Henry
Hub settled at $6.733 per MMBtu yesterday, decreasing about 70 cents per MMBtu
or about 9 percent since Wednesday, February 22. The March 2006 futures contract expired on
February 24, closing at 7.112 per MMBtu, which is a decline of about $2.28 per
MMBtu since January 30, when it became the near-month contract. The 12-month futures strip (April 2006
through March 2007) traded at a premium of $1.73 per MMBtu relative to the
Henry Hub spot price, averaging about $8.35 per MMBtu as of Wednesday, March 1,
with contracts ranging between $6.73 and $10.44 per MMBtu.
Estimated Average Wellhead Prices |
||||||
|
Sept-05 |
Oct-05 |
Nov-05 |
Dec-05 |
Jan-06 |
Feb-06 |
Price
($ per Mcf) |
9.76 |
10.97 |
9.54 |
10.02 |
8.66 |
7.28 |
Price
($ per MMBtu) |
9.50 |
10.68 |
9.29 |
9.76 |
8.43 |
7.09 |
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 1,972 Bcf as of Friday, February 24, 2006,
according to EIA's Weekly Natural Gas
Storage Report (See
Storage Figure). Storage levels are 641 Bcf, or 48 percent, above the 5-year average, and
344 Bcf, or 21 percent, above the storage level at this time last year. The implied net withdrawal of 171 Bcf is 45
percent above the 5-year average net withdrawal of 118 Bcf, and 64 percent
above last year's net withdrawal of 105 Bcf. This week's net withdrawal is the second largest of the heating season
(November 2005 through March 2006). The
relatively large withdrawal likely resulted from colder-than-normal
temperatures in each of nine Census Divisions in the Lower 48 States during the
report week (See Temperature Maps). Temperatures along the East Coast showed the
smallest deviations from normal as New England, the Middle Atlantic, and South
Atlantic divisions experienced temperatures 4, 2, and 4 percent colder-than-normal,
respectively, as measured by the National Weather Service heating degree days
for the week ending February 23, 2006. Temperatures in the East and West North Central divisions were about 15
and 25 percent, respectively, above average. Overall, heating degree days were 17 percent above normal for the Lower
48 States. Despite the relatively large
net withdrawal, only 1,222 Bcf has been withdrawn from storage since the
beginning of the heating season on November 1. If withdrawals from storage over the remaining weeks of the heating
season match the 5-year average, then cumulative net withdrawals for the
heating season will be slightly above 1,500 Bcf. This is about 25 percent below the 5-year
average withdrawal of 2,018 Bcf, and the smallest cumulative seasonal
withdrawal since 1989.
Other Market Trends:
EIA Reports Financial Results for Major
Energy Companies: Twenty-one of the nation's major energy
companies reported overall net income of $28.7 billion on revenues of $298.4 billion
during the fourth quarter of 2005, according to information released by the
Energy Information Administration (EIA). (EIA defines major energy companies as ". . . U.S.-based publicly-owned
companies or U.S.-based subsidiaries of publicly-owned foreign companies that
had at least 1 percent of either production or reserves of oil or gas in the
United States, or 1 percent of either refining capacity or petroleum product
sales in the United States.") The 43
percent increase in net income in the fourth quarter of 2005 over the fourth
quarter of 2004 primarily resulted from higher crude oil and natural gas
prices, higher refining margins, and higher foreign refinery throughput. The
report (Financial
News for Major Energy Companies), prepared from data compiled
from the companies' press releases, attributes the significantly higher results
primarily to a 72 percent rise in natural gas wellhead prices and a 32 percent increase
in crude oil prices as measured by the refiner acquisition cost of imported
crude oil for the year. Worldwide
downstream natural gas and power earnings increased by 76 percent largely owing
to the absence of large losses, higher natural gas liquids (NGL) prices, and
reduced operating costs. Mixed results were reported by the majors'
chemical operations, which noted a 3 percent earnings increase during the
fourth quarter of 2005 relative to the fourth quarter of 2004. Four of the nine
companies with chemical operations reported increases, while the rest reported
decreases primarily owing to lower margins, higher feedstock costs, reduced sales volumes, and outages resulting from
Hurricanes Katrina and Rita.