xxxxx |
Home > Natural Gas > Natural Gas Weekly Update |
Overview:
Thursday, December 14 (next release 2:00 p.m. on December 21, 2006) Softening
natural gas market conditions led to spot price decreases at most market
locations in the Lower 48 States since Wednesday, December 6, with decreases
ranging between $0.02 and $1.22 per MMBtu. The few price increases on the week
were mostly confined to market locations west of the Rocky Mountains. On
Wednesday, December 13, prices at the Henry Hub averaged $7.21 per MMBtu,
decreasing $0.13 per MMBtu, or about 2 percent, since the previous
Wednesday. The prices of futures
contracts through December 2007 changed only slightly since December 6. The
price for the January delivery contract decreased about 5 cents per MMBtu, or
about 1 percent on the week (Wednesday-Wednesday), settling at $7.673 per MMBtu
yesterday (December 13). Natural gas in
storage was 3,238 Bcf as of December 8, which is 7.5 percent above the 5-year
average. The spot price for West Texas
Intermediate (WTI) crude oil decreased 86 cents per barrel, or about 1 percent
on the week to $61.34 per barrel or $10.58 per MMBtu. Higher-than-average
volumes of natural gas in underground storage and the return of
warmer-than-normal weather across much of the country during the week ended
December 13 led to spot prices decreases at most market locations in the Lower
48 States. The highest regional decrease on the week occurred in Florida at
$0.57 per MMBtu, despite Florida Gas Transmission Company extending an overage
alert day through the weekend (December 9-10). (See Other Market Trends) Trading locations in the Alabama/Mississippi
region and the Rockies recorded average decreases of 40 cents and 37 cents per
MMBtu, respectively. Price decreases in the Northeast region were somewhat less
pronounced, averaging about $0.26 per MMBtu.
However, several key Northeast market locations that serve large
segments of the region had price decreases of more than $0.30 per MMBtu. Spot
prices at a number of locations, mostly west of the Rockies, increased on the
week. Prices in California increased 23 cents per MMBtu, to a regional average
of $7.28. Similarly, trading locations in the Arizona/Nevada area recorded an
increase of 11 cents per MMBtu to an average of $7.19 per MMBtu. As of
yesterday, the average price in the Rocky Mountains of $5.63 per MMBtu was the
lowest regional spot price average, and the only one under $6 per MMBtu. The
average prices in the remaining trading regions in the Lower 48 States ranged
yesterday between $6.681 per MMBtu in the Midcontinent and $7.688 per MMBtu in
the Northeast. Forecasts
of warmer-than-normal temperatures for the remainder of December had somewhat
of a neutralizing effect on the futures market. At the NYMEX, the price of the
futures contract for January delivery at the Henry Hub decreased $0.054 per
MMBtu or about 1 percent since Wednesday, December 6, to $7.673 per MMBtu. The
$7.673-per MMBtu price of the January 2007 contract is significantly lower than
the year-ago price of the January 2006 contract. In fact, on December 13, 2005,
the January 2006 contract price settled at of $15.378 per MMBtu, which is an
all-time high for a near-month futures contract. Similar to the January 2007
contract, the price for the February 2007 contract decreased $0.015 per MMBtu,
while the price of the March 2007 contract recorded an increase of $0.053 on
the week. Prices for the futures contracts for delivery during the remainder of
the year (April-December) increased since Wednesday by an average of $0.069 per
MMBtu or about 1 percent. Currently, the average price of the futures contracts
for delivery during the refill season months exceeds the average price of the
January-March contracts by 14 cents per MMBtu. The 12-month futures strip
(January 2007 through December 2007) traded at a discount of $0.836 per MMBtu
relative to the Henry Hub spot price, averaging $8.046 per MMBtu as of
Wednesday, December 13, and increasing only slightly from last week’s level of
$7.996 per MMBtu. Recent Natural Gas Market Data
Working
gas in storage decreased to 3,238 Bcf as of Friday, December 8, 2006, according
to EIA’s Weekly Natural Gas Storage
Report (See
Storage Figure).
The implied net withdrawal of 168 Bcf leaves storage levels 225 Bcf, or
7.5 percent, above the 5-year average, and 245 Bcf, or 8.2 percent above the
storage level at this time last year.
This week’s implied net withdrawal is 53 percent above the 5-year
average of 110 Bcf, but about 7 percent below last year’s net withdrawal of 182
Bcf. Since the beginning of the heating season (November 1), net withdrawals
totaled 211 Bcf, which is higher than both the 5-year average withdrawal of 172
Bcf and last year’s net withdrawal of 195 Bcf for the same time period. This
week’s above average withdrawal likely resulted from the return of seasonal
temperatures across much of the Lower 48 States, especially in the major
population centers of the Midwest (See Temperature Maps). The East North Central Census Division, which
includes Chicago and other large consuming areas, and the West North Central
Census Division experienced temperatures that were 24 and 22 percent colder
than normal, respectively, as measured by the National Weather Service heating
degree-days. For the week ended December 7, temperatures for the Lower 48
States as a whole were about 12 percent colder than normal, but about 12
percent warmer than last year for the same week. In fact, all Census Divisions
except for the East South and West South Central Census Divisions recorded
temperatures that were warmer than last year. Other Market Trends: EIA Releases
the November Short-Term Energy Outlook: The Energy Information Administration (EIA)
released the latest Short
Term Energy Outlook (STEO),
on December 12, 2006. With projected
colder weather during the first 3 months of 2007, compared with the same period
in 2006, natural gas spot prices at the Henry Hub are expected to average about
$8.58 per thousand cubic feet (Mcf) in the first quarter of 2007. The $8.58 per
Mcf price is approximately $0.65 per Mcf higher than in the first quarter of
2006. The Henry Hub spot price is
projected to average $7.06 per Mcf in 2006 and increase to $7.87 per Mcf in
2007. A combination of forecasted
warmer-than-normal weather this winter and high levels of natural gas in
storage are likely to keep monthly average natural gas spot prices below $9 per
Mcf throughout the heating season. Total
U.S. natural gas consumption in 2006 is expected to decline by 0.5 percent relative
to last year, primarily because of warm weather early in the year. Assuming the weather returns to normal,
consumption is likely to increase by 1.5 percent in 2007. Domestic dry natural gas production is likely
to increase by about 2.3 percent in 2006, then decrease in 2007 by 0.7
percent. As of December 1, the level of
working gas in storage was 3,406 billion cubic feet (Bcf), which was 232 Bcf
above the level last year at the same time and 282 Bcf higher than the 5-year
average. EIA Releases the Reference Case for the 2007 Annual Energy Outlook: On Tuesday, December 5,
the Energy Information Administration (EIA) released reference case projections
for the 2007 Annual Energy
Outlook Early Release (AEO), which presents long-term forecasts
of energy supply, demand, and prices through 2030. The results, which are estimated using EIA’s
National Energy Modeling System, show that total energy demand is projected to
increase from 100.2 quadrillion Btu (quads) to 131.2 quads between 2005 and 2030, an average
annual increase of 1.1 percent.
According to the reference case, natural gas consumption is projected to
increase from about 22.6 quads in 2005 to 26.9 quads in 2030. This projection is down, however, from
previous editions of the AEO that showed consumption increasing to 30 quads or
more in 2030. This partly reflects a
decline in projected natural gas consumption for electricity generation between
2020 and 2030. On the supply side, dry
natural gas production is projected to increase from 18.77 quads in 2005 to
21.15 quads in 2030. The increased production is mainly due to the completion
of an Alaskan natural gas pipeline in 2018, and an increase in unconventional
production that is expected to account for 50 percent of domestic U.S. natural
gas production in 2030. Net liquefied
natural gas (LNG) imports also are expected to increase by about 4 quads
between 2005 and 2030. Prices for
natural gas are projected to decrease over the early years of the AEO
projection. The average lower 48
wellhead price is expected to decrease from $7.29 per MMBtu in 2005 to $4.84
per MMBtu in 2015 (2005 dollars) owing to improved technology, production
expansion from increased drilling, and new import sources. After 2015, the wellhead price is expected to
rise, reaching $5.80 per MMBtu in 2030.
The reference case represents a baseline set of projections under
existing policies and economic and technological constraints. Some possible policy changes, such as the
adoption of policies to limit or reduce greenhouse gas emissions, could change
the reference case projections significantly.
The full publication, which will be released in early 2007, will include
expanded documentation and over 30 additional cases. Natural Gas Transportation Update: ·
Three pipeline
companies had restrictions in place between Thursday, December 7, and Saturday,
December 9, owing to cold temperatures across the service areas. East Tennessee Natural Gas Company
implemented a Maximum Allowable Delivery service, Mississippi River
Transmission Corporation had a System Protection Warning, and Southern Natural
Gas Company had an operational flow order (OFO) in place for short imbalances. ·
Florida Gas
Transmission Company issued an Overage Alert Day notice on Friday, December 8,
in anticipation of forecasted freezing temperatures. The restriction set a 25 percent tolerance
for negative daily imbalances. ·
After a
mechanical failure at Greasewood Compressor Station last week in Rio Blanco
County, Colorado, Questar Pipeline Company reduced nominations to the
TransColorado Pipeline to 35,000 decatherms (Dth) per day. According to Questar, the repairs are
expected to be complete by the Thursday of this week. ·
Kern River Gas
Transmission Company announced on Tuesday, December 12, that high line pack
exists on the entire system that ships gas from the Rockies to Utah, Nevada,
and California. Shippers and operators
were asked to remain close to volumes as specified in their contracts this week. ·
Gulf South
Pipeline Company began scheduled maintenance on Monday, December 6, at the
Jackson Compressor Station in Flowood, Mississippi. The maintenance, which was expected to last
for 6 days, may have reduced capacity by as much as 125 MMcf per day. | ||||||||||||||||||||||||||||||||||||||||||
http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp | ||||||||||||||||||||||||||||||||||||||||||