for week ending January 10, 2007 | Release date: January 11, 2007 | Previous weeks
Overview: Friday, January 11, 2007 (next release 2:00 p.m. on January 18, 2007)
Since
Wednesday, January 3, natural gas spot prices increased by more than 43 cents per
MMBtu at market locations across the Lower 48 States, with increases exceeding
75 cents per MMBtu at most markets. On
Wednesday, January 10, prices at the Henry Hub averaged $6.41 per MMBtu, a
climb of 94 cents per MMBtu, or about 17 percent, since the previous
Wednesday. The NYMEX futures contract
for February delivery at the Henry Hub settled at $6.755 per MMBtu on
Wednesday, January 10, rising about 59 cents per MMBtu, or nearly 10 percent,
from the settlement price of $6.163 recorded last Wednesday, January 3.Natural gas in storage was 3,025 Bcf as of
January 5, which is 18 percent above the 5-year average. The spot price for West Texas Intermediate
(WTI) crude oil decreased $4.36 per barrel, or about 7 percent, on the week
(Wednesday-Wednesday) to $53.95 per barrel or $9.30 per MMBtu, which is the
lowest level since June 10, 2005.
Spot prices increased at most market locations since last Wednesday, January 3, generally by more than 75 cents per MMBtu.Most of these increases have occurred since Friday, January 5, as cold temperatures contributed to increased heating demand for natural gas. For the week, the largest price increases occurred principally in the eastern third of the Lower 48 States, including the Louisiana, Alabama/Mississippi, Florida, and Northeast regions as prices rose between 87 and 95 cents per MMBtu on average. The Rocky Mountains region experienced similar hikes with prices climbing about 88 cents per MMBtu.Elsewhere, price increases were less pronounced.In Arizona, Nevada, and California, price hikes ranged between 46 and 52 cents per MMBtu on average, while prices in the Midwest, Midcontinent, and Texas regions climbed between 53 and 82 cents per MMBtu. Prices remain significantly below levels reported last year at this time, with prices at the Henry Hub $2.19 per MMBtu or 25 percent below last year's level. Record-high levels of working gas in storage for this time of year likely ameliorated the price increases resulting from the recent cold snap.
At the NYMEX, prices for the futures contracts for the next 12 months increased across the board with the 12-month futures strip (February 2007 through January 2008 ) climbing about 38 cents per MMBtu, or about 5 percent, since last Wednesday, January 3. The largest increases occurred for contracts for delivery during the 2 remaining heating-season months, February and March 2007, with prices climbing about 9 percent on average since last Wednesday, January 3. Averaging $6.79 per MMBtu, the futures contract prices for delivery during the remainder of the current heating season traded at an average premium of about $0.38 per MMBtu to the Henry Hub spot price. Overall, the 12-month futures strip (January 2007 through December 2007) traded at a premium of $1.04 per MMBtu relative to the Henry Hub spot price, averaging $7.4505 per MMBtu as of Wednesday, January 10. Despite the price increases since last Wednesday, January 3, futures contracts are trading at significant discounts relative to last year's levels at this time. On Wednesday, January 10, each contract in the 12-month strip (February 2007 through January 2008) settled more than $2.13 per MMBtu, or about 20 percent, below last year's 12-month strip (February 2006 through January 2007) at this time.
Estimated Average Wellhead Prices |
||||||
|
July-06 |
Aug-06 |
Sep-06 |
Oct-06 |
Nov-06 |
Dec-06 |
5.82 |
6.51 |
5.51 |
5.03 |
6.43 |
6.65 |
|
Price
($ 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 totaled 3,025 Bcf as of Friday,
January 5, which is about 18 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 January 5, stocks exceeded last year's
level by 401 Bcf and the 5-year average by 461 Bcf. Furthermore, this is only the second time
that working gas stocks exceeded the 3.0 trillion cubic feet (Tcf) mark at this
point in the heating season. Based on
daily interpolated values, working gas in storage is estimated at 3,061 Bcf as
of December 31, 2006, compared with December 31, 1990, when working gas stocks
totaled 3,068 Bcf. On the week,
withdrawals from storage totaled 49 Bcf. Warmer-than-normal temperatures prevailed during the report week, likely
mitigating withdrawals from working gas. During the report week, heating degree-days in the Lower 48 States were
about 30 percent below normal levels. Heating degree-days fell 21 to 41 percent below normal levels in seven
of the nine Census Divisions. Only the
Pacific and Mountain Census Divisions had heating demand approximating normal
levels with heating degree-days falling just below historical norms by 3 and 2
percent, respectively. (See
Temperature Maps)
EIA Forecasts Increased LNG Import Growth: Although liquefied natural gas (LNG) imports still
account for less than 3 percent of total U.S. natural gas supplies, the global
market is growing and the Energy Information Administration (EIA) foresees another
wave of U.S. LNG import growth over the next 2 years. EIA's January 2007 Short-Term Energy Outlook (STEO) focuses on recent trends in global and U.S. LNG trade and
presents factors expected to influence LNG imports through 2008. After
substantial increases early this decade (including more than doubling between
2002 and 2003), the volume of LNG imports has decreased over the past 2 years.
EIA expects a revitalization of U.S. LNG imports during 2007 and 2008 with year-over-year changes of 34.5 and 38.5
percent, respectively. Whereas LNG imports are estimated to have fallen to 580
Bcf in 2006, they are expected to reach approximately 1,080 Bcf by 2008.EIA's LNG import forecast is based in part on
expected supply expansion in the global market over the coming years, including
exports from up to three new source countries (Equatorial Guinea, Norway, and
Yemen). Increasing global LNG supplies should ease price pressure in the world
market over time, and as a result the United States likely will attract a
greater share of available LNG cargoes. Price competition in both the Atlantic
and Pacific Basins, particularly from the Atlantic Basin's Spain and the United
Kingdom, has recently limited spot shipments of LNG to the United States. The
special supplement to the January STEO can be found at http://www.eia.doe.gov/emeu/steo/pub/LNG_Jan2007.pdf
.