for week ending May 24, 2006 | Release date: May 25, 2006 | Previous weeks
Overview: Thursday, May 25 (next release 2:00 p.m. on June 1, 2006)
Since
Wednesday, May 17, natural gas spot prices decreased at most market locations
in the Lower 48 States.On Wednesday, May
24, prices at the Henry Hub averaged $6.01 per MMBtu, decreasing 15 cents per
MMBtu, or about 2 percent, since the previous Wednesday. The NYMEX futures contract for June delivery
at the Henry Hub settled at $5.964 per MMBtu, on Wednesday, May 24, declining about
17 cents or 3 percent since last Wednesday. Natural gas in storage was 2,163 Bcf as of May 19, which is almost 50 percent
above the 5-year average. The spot price
for West Texas Intermediate (WTI) crude oil increased 82 cents per barrel, or about
1 percent, on the week (Wednesday-Wednesday) to $69.47 per barrel or $11.978
per MMBtu.
Spot
prices decreased at most market locations since last Wednesday, May 17, falling
by as much as 66 cents per MMBtu. Moderate
temperatures in most of the Lower 48 States and sufficient supplies of natural
gas in storage likely contributed to the price declines. Overall, price declines were widespread but
more pronounced in areas west of the Rocky Mountains region where decreases
ranged between 24 and 66 cents per MMBtu, or about 5 to 11 percent, at most
market locations. Prices in the
Midcontinent and West Texas regions were also significantly below those of last
Wednesday, May 17, but the price declines were not quite as large as in the
West, ranging between 19 and 41 cents per MMBtu at most market locations. The
smallest declines since last Wednesday, May 17, occurred principally in the
Gulf of Mexico producing areas including East Texas, Louisiana, Mississippi,
and Alabama, where prices fell less than 2 percent at most locations. In contrast to the overall pattern of
declining prices in the Lower 48 States, prices increased at a few selected
market locations principally serving customers in the Southeast. The largest increase occurred at the Florida
citygate market location, where prices increased 50 cents per MMBtu, or about 8
percent, to $6.99 per MMBtu. Overall, prices
are down relative to last year's levels, with differences mostly ranging
between 24 and 90 cents per MMBtu, or about 3 to 15 percent. Prices at the Henry Hub are about 44 cents
per MMBtu or about 7 percent below last year's level.
At
the NYMEX, the futures contract for June delivery at the Henry Hub settled yesterday
(May 24) at $5.964 per MMBtu, declining about 3 percent since Wednesday, May 17. On Thursday, May 18, the June 2006 contract
settled at $5.997 per MMBtu, falling below $6 for the first time since January
21, 2005. Prices for the other futures
contracts through May 2007 decreased between 3 and 8 percent, or about 21 to 63
cents per MMBtu, for the week. The 12-month futures strip (June 2006 through May
2007) traded at a premium of $2.19 per MMBtu relative to the Henry Hub spot
price, averaging $8.20 per MMBtu as of Wednesday, May 24.The futures contract prices for the upcoming
heating season months (November 2006 through March 2007) are about $3.77 per
MMBtu higher than the Henry Hub spot price on average. Differentials of this magnitude between the
spot price and the futures contract prices provide suppliers strong economic
incentives to inject gas into storage.
Recent Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Nov-05 |
Dec-05 |
Jan-06 |
Feb-06 |
Mar-06 |
Apr-06 |
9.54 |
10.02 |
8.66 |
7.28 |
6.52 |
6.59 |
|
Price
($ per MMBtu) |
9.29 |
9.76 |
8.43 |
7.09 |
6.35 |
6.42 |
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 totaled 2,163 Bcf as of Friday, May
19, which is 50 percent above the 5-year average inventory level for the report
week, according to EIA's Weekly Natural Gas Storage Report (See Storage Figure). During the week, the implied net injection of
83 Bcf was 7 percent less than the 5-year average of
90 Bcf and 10 percent less than last year's injection
of 93 Bcf. As of May 19, stocks exceeded last year's
level by 484 Bcf. With working gas levels well above
historical levels for this time of year, lingering uncertainty about the
sustainability of the current price level and operational constraints that have
been indicated in anecdotal evidence (see related discussion in the Natural Gas Transportation Update,
below) may have contributed to the below-average injection. During the report
week, moderate temperatures in the Lower 48 States likely mitigated natural gas
demand for heating and air conditioning. Heating degree days were above normal in each of the Census divisions
with the exception of the Pacific, Mountain, and Middle Atlantic Census divisions. Cooling degree days were below normal on
average in the Lower 48 States.Overall,
temperatures were moderate throughout most of the Lower 48 States, limiting
potential demand for natural gas for either heating or air conditioning load at
this point in the injection season. (See Temperature Maps)
Other Market Trends:
First Quarter
Financial Performance of Independent Energy Companies: The Energy Information Administration (EIA)
released on May 23, the first quarter financial data from U.S. independent
energy companies, which are typically smaller than the major U.S. energy
companies and do not have integrated production and refining operations. The report includes data for three types of
companies:oil and gas producers, oil
field companies, and refiners/marketers. Overall, the 48 companies included in this report reported total net
income of $4,239 million, which is 81 percent more than the first quarter of
2005. Total revenue in the first quarter
of 2006 was $31,944 million, which is 33 percent more than during the first
quarter of 2005. The higher net incomes
and revenue may partly be attributed to increases in both natural gas and crude
oil prices, as the natural gas wellhead price rose about 31 percent and refiner
acquisition costs of imported crude oil rose about 33 percent between the first
quarters of 2005 and 2006. Net income of
the oil and gas producers in the first quarter of 2006 rose by 56 percent more
than the first quarter of 2005 and revenue rose by 35 percent. Net income of U.S. oil field companies
increased by 89 percent over the first quarter of 2005, and revenues increased
by 34 percent. An increase in active rig
counts contributed to the rise in U.S. oil field company earnings. The worldwide rig count in the first quarter
of 2006 was 3,080, which is 15 percent more than in the first quarter of
2005. For the United States, the rig
count growth rate for the same period is 19 percent. Moreover, this quarter-year total marks the
13th consecutive quarter that natural gas rig counts have increased over
year-earlier counts. Total income for
the third group, refiners/marketers, was 4 percent more than during the first
quarter 2005 and total revenue increased by 33 percent. The modest increase in net income for
refiners/marketers compared with the other two groups reflects a small increase
in U.S. gross refining margin of 1 percent over the year-ago quarter.
Active 2006 Hurricane Season Predicted: The National
Oceanic and Atmospheric Administration (NOAA) has released its 2006 hurricane
season forecast for the north Atlantic region. According to the forecast, this year's hurricane season is expected to
be more active than normal, but there are fewer storms predicted than the
numbers during last year's record-breaking season. NOAA is predicting 13 to 16 named storms in
the north Atlantic region this year compared with 28 last year and an average
number of 11 named storms. Of the named
storms, 8 to 10 are expected to become hurricanes compared with 15 last year
and a historical average number of 6 hurricanes in this region. Lastly, NOAA says that 4 to 6 of this year's
storms could become major hurricanes of Category 3 strength or higher. In 2005, there were 7 major hurricanes in the
Atlantic (a record 4 hit the United States), and the average number of major
hurricanes in this region is 2. Factors
contributing to the greater number and intensity of storms include:warmer ocean water, low wind shear (wind
shear typically inhibits a building storm), and weaker easterly trade
winds. The hurricane season begins in
June and lasts until late November. Regardless of the forecast, NOAA is stressing preparedness and announced
that May 21-27 is National Hurricane Preparedness Week.
Natural Gas Transportation Update: