for week ending November 1, 2006 | Release date: November 2, 2006 | Previous weeks
Overview: Thursday, November 2 (next release 2:00 p.m. on November 9, 2006)
Since
Wednesday, October 25, natural gas spot prices decreased at most market
locations in the Lower 48 States.On
Wednesday, November 1, prices at the Henry Hub averaged $7.16 per MMBtu, a decline
of 4 cents per MMBtu, or less than 1 percent, since the previous Wednesday. The NYMEX futures contract for December delivery
at the Henry Hub settled at $7.712 per MMBtu, on Wednesday, November 1, falling
about 62 cents per MMBtu, or 7 percent, from the settlement price of $8.328 recorded
last Wednesday, October 25. Natural gas
in storage was 3,452 Bcf as of October 27, which is about 9 percent above the
5-year average. The spot price for West
Texas Intermediate (WTI) crude oil decreased 45 cents per barrel, or less than
1 percent, on the week (Wednesday-Wednesday) to $58.64 per barrel or $10.11 per
MMBtu.
Spot prices decreased at most market locations since
last Wednesday, October 25, with decreases of up to 22 cents per MMBtu, although
some markets posted price hikes. While
the week-on-week price changes were relatively modest, intraweek trading was
characterized by considerable variability.Prices posted significant gains in trading at most market locations on
Thursday, October 26, as cold temperatures contributed to increased heating
demand for natural gas. These gains were
followed by warmer temperatures and 3 successive days of declining prices, reversing
Thursday's gains. On Wednesday, November
1, prices again rallied, climbing between 25 and 84 cents per MMBtu as a cold
front moved into the Midwest. For the
week, most regions in the Lower 48 States posted region-wide average declines
of up to 12 cents per MMBtu with the exception of the California, Northeast, and
Florida regions. Price hikes at northern
California market locations led to an average increase of about 1 cent per
MMBtu in the State. In the Northeast
region, price increases at the New York citygate and on the Algonquin Pipeline
contributed to an average increase of about 2 cents per MMBtu in the
region. With an increase of 34 cents per
MMBtu, or about 5 percent, the Florida citygate posted the largest increase in
the Lower 48 States since last Wednesday, October 25.Prices remain below the level reported last
year at this time, with prices at the Henry Hub $3.63 per MMBtu or nearly 34
percent below last year's level.
At the NYMEX, prices for the futures contracts for the
next 12 months decreased across the board with the 12-month futures strip (December
2006 through November 2007) falling about 35 cents per MMBtu, or about 4 percent,
since last Wednesday, October 25. The largest decreases on the 12-month futures
strip occurred for contracts for delivery during the remaining heating-season
months (December 2006 through March 2007), as prices decreased by about 6 percent
on average since last Wednesday, October 25. Averaging $8.08 per MMBtu, the futures contract prices for delivery during
the upcoming heating season traded at an average premium of about $0.92 per
MMBtu to the Henry Hub spot price. Overall, the 12-month futures strip (December
2006 through November 2007) traded at a premium of $0.79 per MMBtu relative to
the Henry Hub spot price, averaging $7.95 per MMBtu as of Wednesday, November 1. The futures contract for October delivery at
the Henry Hub expired at $7.153 per MMBtu on Friday, October 27, declining
$1.761 per MMBtu, or nearly 33 percent, during its tenure as the near-month
contract.
Estimated Average Wellhead Prices |
||||||
|
Apr-06 |
May-06 |
June-06 |
July-06 |
Aug-06 |
Sep-06 |
6.59 |
6.19 |
5.80 |
5.82 |
6.51 |
5.51 |
|
Price
($ per MMBtu) |
6.42 |
6.03 |
5.65 |
5.67 |
6.34 |
5.37 |
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 3,452 Bcf as of Friday,
October 27, which is about 9 percent above the 5-year average inventory level
for the report week, according to EIA's Weekly Natural Gas Storage Report (See Storage Figure). As of October 27, stocks exceeded last year's
level by 288 Bcf and the 5-year average by 276 Bcf.
For the week, the implied net withdrawal of 9 Bcf
contrasts with the 5-year average of injection 30 Bcf
and last year's injection of 36 Bcf. This is the
earliest weekly withdrawal approaching the heating season since 1994 when the
weekly data series began. The only other instance of a withdrawal in October
was reported for the week ending October 31, 1997. Unusually colder-than-normal
temperatures that prevailed during the report week in large sections of the
country likely contributed to the withdrawal from working gas stocks as the
unseasonably cool temperatures would have increased heating demand for natural
gas. During the report week, heating degree-days
in the Lower 48 States exceeded normal levels by about 31 percent.Heating degree-days along the northern tier
of the Lower 48 States, including the Northeast, Middle Atlantic, East North
Central, West North Central, and Mountain regions, exceeded normal levels by 9
to 54 percent.(See Temperature
Maps)
FERC Issues Notice of Proposed Rulemaking: The Federal Energy Regulatory Commission (FERC)
issued a notice of proposed rulemaking on October 25, 2006, that seeks to
improve coordination between the natural gas and electric industries by
revising the agency's regulations governing the standards for business
practices and electronic communications between the two sectors. The FERC
proposal incorporates certain standards promulgated by the Wholesale Gas
Quadrant and the Wholesale Electric Quadrant of the North American Energy
Standards Board (NAESB). These standards will establish communication protocols
between interstate pipelines and power plant operators and transmission owners
and operators. The proposed standards would require gas-fired power plant
operators and natural gas pipelines to establish procedures to communicate
material changes in circumstances that may affect hourly flow rates. These
standards would ensure that pipelines have relevant planning information that
will assist in maintaining the operational integrity and reliability of
pipeline service, as well as providing gas-fired power plant operators with
information as to whether hourly flow deviations can be honored. They would
further improve communication by requiring pipelines to provide operational
flow orders and other critical notices to electric transmission operators,
including independent system operators (ISOs) and regional transmission
organizations (RTOs), as well as power plant operators that sign up with
connecting pipelines. These standards will ensure that operators of the
electric grid can remain informed of developments on gas pipelines that can
affect the reliability of electric service. This information should assist
reliability coordinators in assessing the relative reliability of various
gas-fired generators. FERC asked RTOs and ISOs to file their
responses and proposed revisions by January 16, 2007.