for week ending November 15, 2006 | Release date: November 16, 2006 | Previous weeks
Overview: Thursday, November 16 (next release 2:00 p.m. on November 30, 2006)
Changes
in natural gas spot prices were modest at most trading locations in the Lower
48 States this week (Wednesday-Wednesday, November 8-15), as current demand for
space-heating remained relatively low amid continuing concerns over long-term
supplies. For the week, the price at the Henry Hub increased $0.08 per MMBtu,
or about 1 percent, to $7.45. At the New York Mercantile Exchange (NYMEX), the
price of the futures contract for December delivery at the Henry Hub moved
about 30 cents per MMBtu, or 3.4 percent, higher on the week to settle
yesterday (Wednesday, November 15) at $8.12. Natural gas in storage was 3,450 Bcf as of Friday, November 10, which is
7.4 percent higher than the 5-year average. The spot price for West
Texas Intermediate (WTI) crude oil decreased $1.14 per barrel or about 2 percent,
since last Wednesday (November 8) to trade yesterday at $58.79 per barrel or
$10.14 per MMBtu.
Natural gas spot prices yesterday (November 15) were
generally within a dime of last Wednesday's prices. Although seasonally mild
temperatures limited space-heating demand during the second week of the heating
season, concerns over the long-term supply picture and relatively high prices
for competing petroleum products continued to provide support for generally
strong prices into the winter. The Henry Hub price rose in each trading day
starting Monday for a cumulative weekly increase of 8 cents per MMBtu. At $7.45
per MMBtu, the Henry Hub price yesterday was the highest since late October and
more than double this season's low of $3.66 (reached on September 29). With
very few exceptions, other trading locations in producing areas along the Gulf
Coast and in South Texas also registered changes up to a dime, either up or
down. Prices increased significantly in the Rockies from last week's levels as
temperatures returned to normal after a mild beginning to November. For the
week, trading locations in the Rockies registered an average price increase of
$0.80 per MMBtu to trade at an average of $5.90. However, price movements in
the region varied considerably throughout the week, following the rupture of a major
pipeline that blocked regional production from moving to markets. The rupture
of a Wyoming Interstate Co. (WIC) line occurred near Cheyenne, Wyoming,
essentially stranding large volumes of production. Prices on Monday decreased
sharply in production-area trading locations such as Kern River, which posted an
average of $1.86 per MMBtu on Monday. WIC intends to have returned to full
capacity in time for scheduling on Thursday, November 16. Price impacts from
the temporary loss of capacity out of the Rockies rippled all the way to alternative
supply sources to meet demand in Midwest markets. For example, the price for
supplies off Natural Gas Pipeline Company of America's (NGPL) Amarillo Mainline,
a major pipeline into the Midwest, increased 99 cents per MMBtu during trading
on Monday. The price at the Chicago citygate registered a more moderate
increase of 20 cents per MMBtu on the day. For the week, the Chicago citygate
price increased 3 cents per MMBtu to $7.44. In the Northeast, moderate temperatures
resulted in an average price decrease of $0.08 per MMBtu. The price for gas off
Transcontinental Gas Pipe Line (Transco Zone 6) into New York City decreased
$0.11 per MMBtu, or about 1.4 percent, to $7.85, only a $0.40-premium to the
Henry Hub price. The relatively-low basis differential between the Henry Hub
and Transco Zone 6 likely reflected limited weather-related demand in market
areas.
Estimated Average Wellhead Prices |
||||||
|
May-06 |
June-06 |
July-06 |
Aug-06 |
Sep-06 |
Oct-06 |
6.19 |
5.80 |
5.82 |
6.51 |
5.51 |
5.03 |
|
Price
($ per MMBtu) |
6.03 |
5.65 |
5.67 |
6.34 |
5.37 |
4.90 |
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 November 10 was 3,450 Bcf, which is 7.4 percent above the
5-year average inventory level for the reporting week, according to EIA's Weekly Natural Gas Storage Report (See Storage Figure).
The implied net injection of 5 Bcf for the report week was considerably less
than both last year's net injection of 54 Bcf and the 5-year average net
injection of 13 Bcf. As a result, the difference between this year's stocks and
the 5-year average has decreased to 238 Bcf, and the difference between this
year's stock level and last year's declined to 176 Bcf. While the report's net
change in working gas stocks follows 2 weeks of net withdrawals from storage,
net injections are not unusual in November. In fact, EIA reported at least one
net injection during November in each of the past 3 years. Lower-than-normal heating
demand in key market locations contributed to the net injection, as
warmer-than-normal temperatures were extensive (See Temperature
Maps). Temperatures
across the Lower 48 States were about 10 percent warmer than normal for the
week ending November 9, according to the number of heating degree-days as
measured by the National Weather Service. Most notably, heating degree-days in
the East North Central Census Division were 5 percent less than the normal
level for the week. The East North Central Division includes Chicago and other
major heating-demand markets.
EIA Updates Its Residential Price
Brochure: The Energy information
Administration (EIA) has released the 2006 update of the brochure entitled Residential
Natural Gas Prices: What Consumers Should Know. This brochure provides basic
information to residential consumers concerning natural gas supplies and
prices. It explains the factors that influence natural gas prices, summarizes EIA's projections for the coming heating season, and
suggests ways for consumers to save on their natural gas bills. EIA projects
that the cost of natural gas at the wellhead (commodity cost) will comprise 60
percent of the residential price this winter, because of market conditions that
include weak natural gas production response despite increased drilling levels,
declining net imports, high demand, and high crude oil prices. For the heating
season of 2006-2007, EIA estimates that homeowners will pay about $1.07 per therm, or about $11.01 per thousand cubic feet (Mcf), for natural gas. The nearly 18 percent decrease in
price, coupled with an expected increase in consumption of about 4 percent,
assuming normal weather, would result in a decrease of about 14 percent in
total expenditure for gas by households.