for week ending January 4, 2007 | Release date: January 5, 2007 | Previous weeks
Overview: Friday, January 5. 2007 (next release 2:00 p.m. on January 11, 2007)
Natural gas spot prices increased this
week at almost all market locations despite dropping crude oil prices and unseasonably
mild temperatures that continue to persist in most regions outside of the
Rockies. For the week (Wednesday to Thursday,
December 27 to January 4), the spot price at the Henry Hub increased 5 cents
per MMBtu, or less than 1 percent, to trade at $5.60 per MMBtu yesterday
(January 4). The price of the NYMEX
futures contract for February delivery at the Henry Hub also increased less
than 1 percent this week.The contract
closed yesterday at $6.162 per MMBtu, which is 2 cents per MMBtu higher than
last Wednesday's price.Natural gas in
storage as of Friday, December 29, was 3,074 Bcf, which is 15.3 percent above
the 5-year average. The spot price for
West Texas Intermediate (WTI) crude oil dropped $4.66 per barrel since last Wednesday
to trade yesterday at $55.65 per barrel or $9.59 per MMBtu.
Despite
mild weather and declining oil prices, which typically place downward pressure
on prices, natural gas spot prices mostly increased since Wednesday, December
27. The increases ranged from $0.01 to
$1.29 per MMBtu, and reflected varying conditions across the Lower 48
States. The Henry Hub spot price traded
yesterday (Thursday, January 4) at $5.60 per MMBtu, which is about 5 cents less
than the price last Wednesday. The Henry
Hub price fluctuated during the report week, however, decreasing to $5.41 on
Tuesday, which is the lowest price since this year's heating season began
(November 1). Although
warmer-than-normal temperatures likely resulted in light heating demand for
much of the report week in Louisiana and Texas, short periods of cold weather in
this region in the past 2 days may have caused short spikes in heating
load. The average increase for Texas
locations on the week was 21 cents per MMBtu and, similar to the Henry Hub,
most of the increases occurred since Tuesday. By far, the greatest price increases occurred in the Rockies, which is
experiencing average winter temperatures but is still relatively cold compared with
the rest of the Lower 48 States. The
average regional increase in the Rockies was 74 cents per MMBtu with several
locations recording gains greater than $1.The overall increase in natural gas spot prices occurred despite two
nuclear plants increasing power this week. According to the U.S. Nuclear Regulatory Commission, one unit in South
Carolina returned to full power after a planned outage that began in mid-November
and one unit in southern California has returned to 65 percent power after
completing repairs that had reduced power to less than 30 percent. Natural gas spot prices also deviated from
the WTI crude oil price this week, which decreased to $55.56 per barrel
yesterday, the lowest price since June 15, 2005.
At
the NYMEX, the price of the futures contract for February delivery gained
almost 16 cents in its first 2 days of trading as the near-month contract on
Thursday and Friday last week (December 28 and 29). Despite this early momentum, the contract
settled yesterday at $6.162 per MMBtu, only 2 cents more than the price last
Wednesday, December 27. The January 2007
contract expired on December 27, 2006, at $5.838 per MMBtu, which is the lowest
price for this contract since July 2004 and the lowest expiration price for any
January contract since the January 2003 contract expired at $5.251. Additionally, the January 2007 contract
decreased $3.033 per MMBtu, or about 34 percent, during its tenure as the
near-month contract. The March 2007
contract increased about 7 cents, or about 1 percent, on the week to settle at
$6.330 per MMBtu yesterday. The prices
for these two heating season contracts (January and March) are currently the lowest
for any contract listed on the NYMEX. The
12-month strip, or the average price for contracts over the next year, increased
about 1 percent to close yesterday at $7.058 per MMBtu.
Estimated Average Wellhead Prices |
||||||
|
July-06 |
Aug-06 |
Sep-06 |
Oct-06 |
Nov-06 |
Dec-06 |
5.82 |
6.51 |
5.51 |
5.03 |
6.43 |
6.65 |
|
Price
($ per MMBtu) |
5.67 |
6.34 |
5.37 |
4.90 |
6.26 |
6.48 |
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 decreased to 3,074 Bcf as of Friday, December 29, 2006,
according to the EIA Weekly Natural Gas
Storage Report (See
Storage Figure). Stocks are currently 15.3 percent above the 5-year average and 16.4
percent above last year's level of 2,641 Bcf.The implied net withdrawal during the week was 47 Bcf, which is 53
percent less than the 5-year average withdrawal for this week of 100 Bcf, but
more than double last year's withdrawal of 22 Bcf.Stocks currently exceed the 5-year average
level by about 407 Bcf, which is the greatest margin of this kind since the
week ending July 28, 2006. Mild
temperatures across the country likely contributed to the relatively modest
withdrawal this week with all regions recording warmer-than-normal temperatures
as measured by the National Weather Service's heating degree-days (See
Temperature Maps). The
Lower 48 States as a whole was about 24 percent warmer than normal while the
South and Middle Atlantic and East North Central Census Divisions were more than
30 percent warmer than normal. The
Mountain Census Division, which has experienced significant snowfall recently,
was the coldest of the nine Census Divisions, although only 4 percent warmer
than normal.
EIA Releases An Updated Mexico Country Analysis Brief: The Energy Information
Administration (EIA) on January 3, 2007, published the updated Mexico
Country Analysis Brief, which presents detailed information on
the energy situation in Mexico and includes maps, graphs, and links to various
other related web sites. Mexico is a major non-OPEC oil producer and home to
one of the world's largest oil companies, Petróleos Mexicanos (Pemex). The
State-owned Pemex holds a monopoly on natural gas exploration and production in
Mexico. While the Mexican government opened the downstream natural gas sector
to private operators in 1995, no single company is allowed to participate in
more than one industry function, and private company participation has remained
limited. Mexico's natural gas production has grown in recent years, after steady
declines during the late 1990s. During that time, natural gas consumption has
increased steadily, mostly driven by the electricity sector, whose share of
total natural gas consumption increased from 16 percent in 1994 to 33 percent
in 2004. As a result of the domestic shortfall in natural gas production,
Mexico imported 766 MMcf per day of natural gas in 2004 and 480 MMcf per day in
2005. To help meet the growing natural gas demand, various companies are
developing Mexico's liquefied natural gas (LNG) prospects. Currently, Mexico
has one operating LNG terminal, one under construction, and several more plants
in various stages of the planning process. Many of those facilities are near the
U.S.-Mexico border in Baja California, with the intention to supply markets in
both countries.