for week ending March 7, 2007 | Release date: March 8, 2007 | Previous weeks
Overview: Thursday, March 8, 2007 (next release 2:00
p.m. on March 15, 2007)
Since
Wednesday, February 28, natural gas spot prices generally increased east of the
Rocky Mountains and decreased in the Rocky Mountains and to the west. On Wednesday, March 7, prices at the Henry
Hub averaged $7.52 per MMBtu, gaining 28 cents per MMBtu, or about 4 percent, from
the level of the previous Wednesday (February 28).The NYMEX futures contract for April delivery
at the Henry Hub settled at $7.366 per MMBtu on Wednesday, March 7, rising about
7 cents per MMBtu, or nearly 1 percent, from the settlement price of $7.300 recorded
last Wednesday, February 28. Natural gas
in storage was 1,631 Bcf as of March 2, which is 14 percent above the 5-year
average. The spot price for West Texas
Intermediate (WTI) crude oil increased 7 cents per barrel on the week (Wednesday-Wednesday)
to $61.85 per barrel or $10.66 per MMBtu.
Spot prices increased at most market locations east of
the Rocky Mountains since last Wednesday, February 28. A cold front moving in from Canada contributed
to the price increases, as cold temperatures increased heating demand for
natural gas heading into the weekend. The
largest increases occurred principally in the Northeast region, where increases
averaged $2.27 per MMBtu since Wednesday, February 28.Prices in the Northeast region were
characterized by considerable volatility during the week, as prices at most
market locations increased through Tuesday before declining on Wednesday, March
7. The highest price in the Northeast
region occurred at the New York citygate where prices peaked at $17.56 per
MMBtu on Tuesday, March 6. In and to the
west of the Rocky Mountains, where temperatures were not as frigid, prices generally
declined. Prices fell about 18 cents per
MMBtu on average in the Rocky Mountains region, while in Arizona, Nevada, and
California, price declines ranged between 12 and 19 cents per MMBtu.Selected markets in West Texas and the
Midcontinent regions posted narrow declines. Prices exceeded levels reported last year at this time, with prices at
the Henry Hub 99 cents per MMBtu or 14 percent above last year's level.
At the NYMEX, prices for the futures contracts for the
next 12 months increased across the board with the 12-month futures strip (April
2007 through March 2008) gaining about 11 cents per MMBtu, or about 1 percent, since
last Wednesday, February 28. The price of the NYMEX futures contract for April delivery
at the Henry Hub settled at $7.366 per MMBtu on Wednesday, March 7, rising
about 7 cents per MMBtu, or less than 1 percent. Prices for delivery in the ensuing months
increased by slightly larger margins, increasing a little more than 1
percent. Overall, the 12-month futures
strip (April 2007 through March 2008) traded at a premium of about 79 cents per
MMBtu relative to the Henry Hub spot price, averaging $8.31 per MMBtu as of
Wednesday, March 7.
Recent Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Sep-06 |
Oct-06 |
Nov-06 |
Dec-06 |
Jan-07 |
Feb-07 |
5.51 |
5.03 |
6.43 |
6.65 |
5.92 |
6.66 |
|
Price ($ per MMBtu) |
5.37 |
4.90 |
6.26 |
6.48 |
5.76 |
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 1,631 Bcf as of Friday, March
2, which is about 14 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 March 2, stocks were
below the 1,692 Bcf in storage at the end of last year's heating season,
yet still exceeded the 5-year average by 194 Bcf. On the week, withdrawals from storage totaled
102 Bcf compared with the 5-year average withdrawal of 117 Bcf and last year's
net withdrawal of 97 Bcf for the same report week. Temperatures on average were slightly above historical
levels for the Lower 48 States with heating degree-days exceeding both the
normal level and last year's level by about 3 percent, but with significant
variability among the Census Divisions. In the high gas-consuming areas of the
New England, Middle Atlantic, and East North Central Census Divisions, heating
degree-days were up to 7 percent above historical norms. The Pacific and Mountain Census Divisions
exceeded historical norms by 48 and 14 percent, respectively. Elsewhere, heating degree-days ranged between
4 and 43 percent below normal (See Temperature Maps)
. If net withdrawals from storage during
the remainder of the heating season match the 5-year average, working gas in
storage will finish the heating season at 1,426 Bcf on March 30, 2007, roughly
16 percent above the 5-year average of 1,232 Bcf but 16 percent below last
year's level of 1,692 Bcf.
EIA Releases
Its March Short-Term
Energy Outlook:According to the Energy
Information Administration's (EIA) latest Short
Term Energy Outlook (STEO), released March 6, the Henry Hub spot price is
projected to average $7.58 per Mcf in 2007 and increase to $7.86 per Mcf in 2008.
Drilling for natural gas continues at historically high levels, and domestic
dry natural gas production is expected to increase by 2.4 percent in 2007,
which is a slightly higher growth rate than in 2006. Net imports of natural gas
are expected to decrease for the second year in a row. However, the decline for
2007 (2 percent) would be lower than the net import decline in 2006 (5
percent). EIA expects total liquefied natural gas (LNG) imports to increase
from their 2006 level of 580 Bcf to 770 Bcf in 2007. LNG import
projections remain strong for 2008 as well, expanding by 39 percent to exceed
the 1 Tcf mark. With the return of normal temperatures for 2007, residential
natural gas consumption for the year is expected to be larger than in the previous
year. A first-quarter 2007 comparison of EIA's estimated residential
consumption shows a 14-percent year-over year increase. For the year as a
whole, residential consumption is expected to increase by 10.8 percent in
2007. Similarly, commercial and industrial sector consumption volumes are
expected to increase by 6.3 and 1.9 percent, respectively, in 2007 because of a
return to normal weather, lower commercial prices, and growing industrial
output. Total natural gas consumption for 2007 and 2008 is projected to
increase by 2.9 and 1.8 percent, respectively, after falling by 1.7 percent in
2006. Working gas in underground storage was 1,733 Bcf as of February 23,
falling below year-ago levels, but still remaining above the 5-year average.
Cold weather across most of the Lower 48 States led to record withdrawals of
natural gas from storage in February.