for week ending March 15, 2006 | Release date: March 16, 2006 | Previous weeks
Overview: Thursday, March 16 (next release 2:00 p.m. on March 23, 2006)
Since
Wednesday, March 8, natural gas spot prices have risen
at virtually all market locations in the Lower 48 States, despite some
decreases during yesterday's trading. For the week (Wednesday-Wednesday),
prices at the Henry Hub increased 62 cents, or about 10 percent, to $7.10 per MMBtu.Yesterday
(March 15), the price of the NYMEX futures contract for April delivery at the
Henry Hub settled at $7.143 per MMBtu, increasing
roughly 50 cents, or more than 7 percent, since last Wednesday. Natural gas in storage was 1,832 Bcf as of March 10, which is about 60 percent above the
5-year average. The spot price for West
Texas Intermediate (WTI) crude oil increased $2.05 per barrel, or about 3
percent, on the week to $62.11 per barrel or $10.71 per MMBtu.
Spot prices increased since last Wednesday, March 8, at
virtually all market locations in the Lower 48 States in a break from the
generally downward trend since mid December 2005. The return of cold temperatures after the
weekend and climbing crude oil prices likely contributed to the strength in
natural gas prices. Yesterday's price decreases at most market locations were
not enough to offset the sometimes substantial increases that occurred during
the week. Overall, the price increases ranged mostly between 34 and 72 cents
per MMBtu on the week. The largest price increases, averaging 83 cents per
MMBtu, occurred in the Northeast, where prices rose by as much as 15.5 percent.
Prices at the New York citygate rose 98 cents per MMBtu or about 14 percent, while prices at the Dracut
location increased $1.07 per MMBtu or 15.5 percent since last Wednesday, March
8. In the gas-producing States bordering the Gulf of Mexico, price increases
were more modest, rising on average by 70 cents. The Henry Hub spot price
increased 62 cents per MMBtu on the week, while other Louisiana market
locations recorded average increases of 72 cents or 12 percent. As of
yesterday, prices at most market locations in the Lower 48 States were between
5 and 10 percent lower than last year at the same time.
At
the NYMEX, the price of the futures contract for April delivery at the Henry
Hub increased to $7.143 per MMBtu, which is an increase of
about 50 cents per MMBtu since last Wednesday, March
8. Similarly, prices for the futures contracts through the 2006 injection
season (April through October) also increased, rising about 38 cents per MMBtu or about 5.3 percent. Futures prices remain in contango, and prices for the futures contracts for delivery
through January 2007 were successively higher than each preceding month. Futures prices for delivery during the summer
months of 2006 are somewhat high for this time of year, as May 2006 through
September 2006 contract prices average 3 percent higher than those for the
equivalent futures contracts at this time last year. These relatively high
prices during the summer months reflect expectations of a continually tight
natural gas market, despite the large volumes of working gas remaining in
storage. The 12-month strip, which is the average of the monthly futures prices
for the coming year, settled at $8.673 per MMBtu, or
about 4 percent higher than last Wednesday, March 8. The average price
differential between the futures contract prices for delivery over the next 12
months (April 2006-March 2007) and the Henry Hub spot price was $1.57 per MMBtu
in yesterday's trading, or 30 cents lower than last week, when the Henry Hub
price premium for the 12 months averaged $1.87 per MMBtu.
Recent
Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Sept-05 |
Oct-05 |
Nov-05 |
Dec-05 |
Jan-06 |
Feb-06 |
Price
($ 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 was 1,832 Bcf, which is 688 Bcf or
60.1 percent, above the 5-year average, as of Friday, March 10, according to EIA's Weekly Natural
Gas Storage Report (See Storage Figure). The implied net withdrawal was 55 Bcf for the
week, which is 31 percent less than the 5-year average withdrawal of 79 Bcf and
about 46 percent lower than last year's withdrawal of 101 Bcf. The West region
recorded an above-average withdrawal, consistent with the colder-than-normal
temperatures that prevailed in the Pacific Census Division during the report
week. In the Producing region, on the other hand, the warmer-than-normal
temperatures contributed to a net addition of 5 Bcf. This week's addition in
the Producing region is the eighth since the beginning of the current heating
season, which is the highest number of occurrences for net additions to storage
in the region between November and March in the entire weekly data series since
January 1994. For the week ended March 9, the coldest temperatures prevailed
throughout regions along the northern Atlantic coast, where temperatures were 2
percent to 7 percent colder than normal as measured by the National Weather
Service heating degree days (HDDs). (See Temperature Maps)
Warmer-than-normal temperatures across the South and in the East North Central
Census Division-ranging from 4 percent to 63 percent above normal-offset the
cold across much of the East, resulting in average temperatures for the entire
Lower 48 States that were only about 5 percent colder than normal. As of
yesterday, contracts for delivery during the next heating season (November 2006
- March 2007) were trading at an average premium of $3.11 per MMBtu relative to
the Henry Hub, which helps explain the relatively low withdrawal of gas from
storage.
Other Market Trends:
Minerals
Management Service Holds Lease Sale 198 in the Central Gulf of Mexico: The Minerals Management Service (MMS) conducted
Central Gulf of Mexico Lease Sale 198 on Wednesday, March 15, 2006, in New
Orleans, Louisiana. The lease sale
received 707 bids on 405 tracts, and generated $588,309,791 in high bids from
82 companies for oil and natural gas leases in the Federal Gulf of Mexico. The amount of revenue attributed to high bids
in this year's Central Gulf lease sale is about 60 percent higher than last
year's Central Gulf lease sale, which collected $353,961,798 in high bids from
80 companies for oil and natural gas leases. The total of all bids in this
year's sale was $978,310,887, which represents a 38 percent increase over last
year's sale.According to MMS, the
increased bidding activity can be partly attributed to the current high prices
for oil and natural gas. The lease sale area covers 4,040 blocks
amounting to approximately 21.3 million acres in the Central Gulf of Mexico
Outer Continental Shelf Planning Area offshore Alabama, Louisiana, and
Mississippi. The blocks are
located from 3 to about 210 miles offshore in water depths of 4 to more than
3,400 meters. MMS estimated the lease
sale could result in the production of 276 to 654 million barrels of oil and
1.59 to 3.3 trillion cubic feet of natural gas. Before the sale becomes final and leases are awarded, each of the high
bids on a block will go through an evaluation process to ensure the public
receives fair market value.
Natural Gas Transportation Update: