for week ending January 24, 2007 | Release date: January 25, 2007 | Previous weeks
Overview: Thursday, January 25, 2007 (next release 2:00 p.m. on February 1, 2007)
Natural
gas spot prices across the country surged this week (Wednesday-Wednesday,
January 17-24) as a blast of Arctic cold covered the Lower 48 States, reaching as
far south as Texas. Prices in some gas-consuming markets in the Northeast were
the highest in the country at more than $10 per MMBtu by the end of the week. But
price effects from the increased heating demand registered in production areas
as well. On the week (Wednesday to Wednesday), the spot price at the Henry Hub
increased by $0.89 per MMBtu to an average of $7.46 yesterday (Wednesday,
January 24). At the New York Mercantile Exchange (NYMEX), the price of the
futures contract for February delivery ended trading on Wednesday at $7.421 per
MMBtu, which was $1.187 higher than last Wednesday's price. As of January 19,
natural gas in storage was 2,757 Bcf, or 20.7 percent above the 5-year average
for this week. Crude oil prices climbed $1.94 per barrel since last Wednesday to
an average of $54.24, or $9.35 per MMBtu.
Strong space-heating demand increased the price of
spot gas across the country, as winter has finally set in after the unusually warm
weather thus far this season. The Henry Hub price rose in four straight trading
sessions for a net gain of $0.89 per MMBtu, or 13.5 percent, for the report
week. Although it is still unclear how long the winter-like temperatures will
remain (some forecasters see above-normal temperatures returning in mid-February),
the recent advent of freezing temperatures has stirred the spot markets. As
often occurs at this time of year, buyers and traders this week moved to cover
positions in localized markets experiencing extreme weather, leading to erratic
pricing patterns across the country. For example, gas buyers resorting to the
spot market for incremental supply in the New York area faced sharp price
increases in the past several days. The price at Transcontinental Gas Pipe Line
Zone 6 in New York increased more than $12 per MMBtu on the week to $20.07.
Meanwhile, in New England, the spot price for delivery off the Algonquin Gas
Transmission pipeline system rose by $6.35 per MMBtu on the week to $13.97
yesterday. Although there are numerous reasons for the price spikes in the
Northeast, a primary consideration likely is congestion along pipelines into
and within the region. In recent days customers with only less expensive
"interruptible" capacity on Northeast pipelines have been confronted with less available
capacity as pipeline usage has increased. Price fluctuations this week were
less severe in the Midwest, where the high for the week at the Chicago citygate
was $7.29 per MMBtu yesterday (Wednesday, January 24), and the net change since
the prior Wednesday was $0.69. In contrast to the large price spikes in the
East, trading in the Rockies and California resulted in only slight price
changes (including declines for the week). The spot price at Opal, Wyoming,
declined $0.22 per MMBtu on the week to $6.57. The price at the Southern California
border increased $0.36 per MMBtu, or 5.3 percent, to $7.09.
Estimated Average Wellhead Prices |
||||||
|
July-06 |
Aug-06 |
Sep-06 |
Oct-06 |
Nov-06 |
Dec-06 |
5.82 |
6.51 |
5.51 |
5.03 |
6.43 |
6.65 |
|
Price
($ 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 underground storage was 2,757 Bcf or 20.7 percent above the 5-year
average for the week ending January 19, according to EIA's Weekly Natural
Gas Storage Report (See
Storage Figure). The implied net withdrawal during the
report week was 179 Bcf, which is 19 Bcf more than the 5-year average
withdrawal of 160 Bcf for the week. This
net withdrawal is the largest weekly net withdrawal this
heating season and the largest since December 9, 2005.It ends a string of lower-than-average withdrawals
(based on data from the past 5 years) since the beginning of December 2006. Net
withdrawals of this magnitude are not uncommon, occurring about 10 percent of
the time during the heating season. The
volume of natural gas in storage is still currently 10 percent higher than last
year at this time. In contrast to the relatively large volume of gas in
storage in the East and Producing regions, the overall storage level in the
West is just 11 Bcf, or 3.6 percent, higher than the 5-year average. The trend
of extreme weather conditions in many parts of the West this winter continued
during the report week, resulting in the highest net withdrawal in the region
recorded in EIA's weekly database, which contains data from the last 13 years. Temperatures for the United States as
a whole, as measured by heating degree-days (HDDs), were about 3.9 percent
warmer than normal for the week ending January 18, according to the National
Weather Service (See Temperature Maps).
In particular, warmer-than-normal temperatures continued in key consuming
markets, such as the Middle Atlantic where HDDs were 23 percent below normal.
Natural Gas Rig Count: The number of rigs drilling for natural gas
in the United States increased to a new record high of 1,466 as of Friday,
January 19, 2007, according to Baker-Hughes Incorporated. This record is 16 rigs, or about 1 percent,
higher than the previous record of 1,450, which occurred during the week ending
September 22, 2006, and again during the week ending October 27, 2006. The
current natural gas rig count is 22 rigs higher than last week, and 244 rigs,
or almost 20 percent, higher than the number during this week last year.Of the 1,466 natural gas rigs, 80 are located
in the Gulf of Mexico, which equals last week's Gulf total. The number of natural gas rigs in the Gulf of
Mexico has more than doubled compared with this time last year when several
rigs were damaged by major hurricanes. However, natural gas rigs in the Gulf of Mexico are still 8 rigs less
than the number drilling during this week in 2004, and well below the record
number of 134 that occurred during July and August of 2000. Of the 1,745 total rigs currently drilling in
the United States, 84 percent are natural gas rigs and 15.8 percent are
drilling for oil.