for week ending September 6, 2006 | Release date: September 7, 2006 | Previous weeks
Overview: Thursday, September 7 (next release 2:00 p.m. on September 14, 2006)
Since Wednesday, August 30, natural gas spot prices have decreased at most market locations in the Lower 48 States. For the week (Wednesday-Wednesday), prices at the Henry Hub declined 67 cents, or about 10 percent, to $5.73 per MMBtu. Yesterday (September 6), the price of the
NYMEX futures contract for October delivery at the Henry Hub settled at $5.994 per MMBtu, decreasing roughly 30 cents or about 5 percent since last Wednesday (August 30). Natural gas in storage was 2,976 Bcf as of September 1, which is 12.1 percent above the 5-year average. The spot price for West Texas Intermediate
(WTI) crude oil decreased $2.45 per barrel, or 3.5 percent, on the week to $67.75 per barrel or $11.68 per MMBtu, which is its lowest level since April 25, 2006.
Moderate temperatures and a favorable supply situation led to widespread declines in natural gas spot prices in the Lower 48 States since last Wednesday, August 30. Additionally, the decrease in industrial
demand resulting from the holiday-shortened week provided further downward
pressure on prices. Prices at market locations east of the Rocky Mountain
region declined by an average of 59 cents per MMBtu. The Western market locations recorded smaller declines that ranged between 16 and 35 cents per MMBtu. At trading locations in the Rocky Mountain region, however, about half of the markets recorded increases that averaged 70 cents, while the remaining locations in the region exhibited only modest decreases on the week. Despite the increases for the week, the lowest average regional price as of yesterday was recorded in the Rockies ($5.08 per MMBtu), followed by the Midcontinent ($5.34 per MMBtu), and West Texas ($5.38 per MMBtu). Prices at the Henry Hub decreased 67 cents, or about 10 percent on the week, to $5.73 per MMBtu. Other market locations in Louisiana decreased by an average of 67 cents or about 11 percent, to a regional average price of $5.71 per MMBtu. Average prices in Florida and the Northeast of $6.75 and $6.11 per MMBtu, respectively, were the highest in the Nation as of yesterday, the only two regions to exceed the $6.00 per MMBtu threshold.
Estimated Average Wellhead Prices |
||||||
|
Mar-06 |
Apr-06 |
May-06 |
June-06 |
July-06 |
Aug-06 |
6.52 |
6.59 |
6.19 |
5.80 |
5.82 |
6.51 |
|
Price
($ per MMBtu) |
6.35 |
6.42 |
6.03 |
5.65 |
5.67 |
6.34 |
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 2,976 Bcf as of Friday, September 1, according to EIA's Weekly
Natural Gas Storage Report. Working gas inventories are roughly 12 percent
above both the 5-year average and the level last year for the report week (See Storage Figure). The implied net injection during
the report week was 71 Bcf, which is about 2 percent
above the 5-year average net addition of 69 Bcf for
the week and 81 percent higher than the injection of 39 Bcf
reported for the same week last year. During the week ended August 31, the National Weather Service reported
temperatures that were 11 percent warmer than normal, as measured by the
cooling degree days (CDDs) (See Temperature Maps).
However, the cooling degree days were
about 13 percent below last year's level for the same report week. Despite the
above average volume of natural gas in storage and the more than 8 weeks
remaining in the injection season, the November-2006-through-March-2007 strip
traded yesterday at a premium of $4.20 per MMBtu relative to the Henry Hub spot
price.
Other Market Trends:
Updated 2006 Atlantic Hurricane Season
Projection:Forecasters at Colorado State University's
Tropical Meteorology Project released a report on Friday, September 1, 2006,
which significantly reduces the 2006 seasonal forecast of Atlantic basin
hurricane activity. The report, by Philip
Klotzback and William Gray, titled, "Forecast of Atlantic hurricane activity
for September and October 2006 and seasonal update through August" projects
that this season will experience 13 tropical storms, 5 hurricanes and 2 intense
hurricanes of Category 3 or higher. This is a significant reduction in storm
activity compared with forecasts released in April that predicted 17 named
storms, 9 hurricanes, and 5 intense hurricanes, and an update in August that
predicted 15 named storms, 7 hurricanes and 3 intense hurricanes. As of September 1, only 5 named storms and 1
low-intensity hurricane (Category 1) had developed, and 18 percent of the Net
Tropical Cyclone (NTC) activity of the average hurricane season had
occurred.In an average year, 33 percent
of the NTC activity occurs before the end of August. June and July 2006 had approximately average
activity, while August has had below-average activity. The forecast for September calls for 5 named
storms, 3 hurricanes, 2 intense hurricanes, and NTC activity of 59, which is
slightly above the September-only average value of 48. The October forecast
calls for 2 named storms, 1 hurricane, no intense hurricanes, and NTC activity
of 12, which is below the October-only average value of 18. The long-term (1950-2000) average is 9.6
named storms, 5.9 hurricanes, and 2.3 intense hurricanes per year. The authors cite several reasons for the
downgraded forecast, including an unexpected increase in tropical Atlantic
mid-level dryness and a continued trend towards El Nino-like conditions in the
eastern and central Pacific.