for week ending August 23, 2006 | Release date: August 24, 2006 | Previous weeks
Overview: Thursday, August 24 (next release 2:00 p.m. on August 31, 2006)
Since
Wednesday, August 16, natural gas spot prices increased at most market
locations with the exception of a few locations in the Northeast. For the week
(Wednesday-Wednesday), prices at the Henry Hub increased 17 cents to $7.19 per MMBtu. Yesterday
(August 23), the price of the NYMEX futures contract for September delivery
settled at $6.875 per MMBtu, increasing about 11
cents or about 2 percent since Wednesday. Natural gas in storage was 2,857 Bcf as of
August 18, which is 13.5 percent above the 5-year average. The spot price for
West Texas Intermediate (WTI) crude oil decreased 19 cents per barrel, or about
0.3 percent, on the week to $71.45 per barrel, or $12.32 per MMBtu.
Despite
the lower cooling load across much of the Lower 48 States and a diminished
threat from Tropical Storm Debby, natural gas spot prices increased at most
market locations on the week. The increases, however, were moderate, as they
were mostly limited to less than 15 cents per MMBtu. With the exception of the
southern United States, power loads have been steadily diminishing in the past
couple of weeks. Gas demand for electric power generation was much lower
compared with the week ending August 5, when the Edison Electric Institute
(EEI) reported record-high weekly electricity demand, leading to the 12 Bcf net
withdrawal for the storage week ended August 4, 2006. On a regional basis,
market locations in East Texas recorded the largest increases since Wednesday,
August 16, averaging 18 cents per MMBtu, followed by Louisiana (16 cents per
MMBtu). Most locations along the Gulf Coast recorded increases between 3 and 18
cents, while major consuming areas in the Midwest recorded an average increase
of 14 cents per MMBtu. Despite the general increases this week, a few market
locations in the Northeast recorded decreases since last Wednesday, the largest
one of which was the 10-cent decrease at the Dracut, MA, trading point. Even
with the overall increases in recent weeks, as of August 23, 2006, spot prices
at market locations in the Lower 48 States are 17 to 30 percent lower than last
year's levels.
At the NYMEX, settlement prices for the futures
contracts for delivery in September and October exhibited weekly increases for the
second time since the beginning of this month.The near-month contract (for September delivery) increased $0.109 per MMBtu since last Wednesday to settle yesterday at $6.875,
which is nearly 31 cents lower than the price during its first day of trading
as the near-month contract. The October 2006 futures contract also increased
$0.067 per MMBtu, or less than 1 percent, to settle
at $7.006 per MMBtu. The slight increase on the week
reflected the possibility of the development of Tropical Storm Debby into a
hurricane. According to the August 24 National Weather Service (NWS) update
however, Tropical Storm Debby is not expected to pose a threat to the United
States, as it is expected to turn north-northwest and perhaps only result in
some rainfall over the East Coast. The
NYMEX contract for February 2007 closed yesterday at $11.291 per MMBtu, which was the highest priced contract in the
12-month strip. Contracts for the next heating season (November 2006 through
March 2007) increased by an average of 15 cents per MMBtu
to settle at an average of $10.635 yesterday, which represents a $3.445 premium
to the Henry Hub spot price.Contracts
for delivery in January and February 2007 have a price premium of about $4 per MMBtu relative to the spot price.
Recent Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Feb-06 |
Mar-06 |
Apr-06 |
May-06 |
June-06 |
July-06 |
7.28 |
6.52 |
6.59 |
6.19 |
5.80 |
5.82 |
|
Price
($ per MMBtu) |
7.09 |
6.35 |
6.42 |
6.03 |
5.65 |
5.67 |
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 as of August 18 totaled 2,857
Bcf, which is 13.5 percent above the 5-year average
inventory level for the week according to EIA's Weekly Natural Gas Storage Report (See
Storage Figure). The net addition to storage
was 57 Bcf, which is 15 percent below the 5-year
average net injection of 67 Bcf and about 3 percent
below the net injection of 59 Bcf for the same week last
year. As of August 18, natural gas stocks were 291 Bcf higher than last year's
level, and also 339 Bcf higher than the 5-year average stocks for the report
week. Temperatures for the Lower 48 States for the week ended August 17 were
normal, and about 14 percent lower than last year for the same week, as
measured by the National Weather Service's cooling degree days (CDDs) (See Temperature Maps). All
Census Divisions east of the Appalachian Mountains experienced
lower-than-normal CDDs. Additionally, the East North
Central and Pacific Census Divisions also recorded cooler-than-normal
temperatures, noting CDDs that were 27 and 7 percent below normal,
respectively. By contrast, the Southern States continued to experience
warmer-than-normal temperatures, reflecting the relatively low 2-Bcf injection
into storage, which sharply contrasts with both the 5-year average injection of
13 Bcf and last year's 9-Bcf injection for the week.
Other Market Trends:
FERC Issues New Rule Requiring Pipeline Companies to Report
Infrastructure Damage On August
23, 2006, the Federal Energy
Regulatory Commission (FERC) revised its rules to better monitor and assess the
physical state of the interstate natural gas pipeline grid and gas storage
infrastructure when service is disrupted because of damage caused by a
hurricane, other natural disasters, or acts of terrorism. The final rule will require jurisdictional
natural gas companies to report to the Commission damage to their facilities
and report service disruptions that occur when a natural disaster or other
cause results in a reduction in pipeline throughput or storage deliverability.
Current
FERC regulations only require regulated entities to report serious service disruptions,
but not damage to the affected gas infrastructure. FERC will now require companies to file
electronically more specific information on the cause and the extent of damage
done to gas infrastructure, even if there is no service interruption. In
addition, FERC will require reporting of the time of damage occurrence,
emergency actions taken by the company to maintain gas service, and when
damaged facilities are fully restored to service, among other things. In
addition to these damage reports, companies must continue to report serious
service interruptions and restoration of service. The final rule is effective immediately upon
publication in the Federal Register.
Natural Gas Rig Count: According to
Baker-Hughes Incorporated, U.S. total rigs drilling reached a record high of
1,762 for the week ending August 18, 2006. The count for natural gas rigs drilling was 1,427, which was also a
record for any week since record keeping by fuel type began in 1987. Compared with last year, the number of
natural gas rigs was 206 higher or almost 17 percent. Gas drilling has been on an upward trend for
more than 4 years, expanding from a low of 591 in April 2002.
Natural Gas Transportation Update: