for week ending March 14, 2007 | Release date: March 15, 2007 | Previous weeks
Overview: Thursday, March 15, 2007 (next release 2:00
p.m. on March 22, 2007)
Spring-like
temperatures in most regions of the country this week led to lower natural gas
spot and futures prices in the Lower 48 States since Wednesday, March 7. On the
week (Wednesday-Wednesday, March 7-14), the Henry Hub spot price decreased 66
cents per MMBtu, or about 9 percent, to $6.86. At the
New York Mercantile Exchange (NYMEX), the futures contract for April delivery
fell 28 cents per MMBtu on the week to a daily settlement
of $7.083 yesterday (March 14). Working gas in underground storage was 1,516 Bcf
as of Friday, March 9, which is 12 percent above the 5-year average inventory
for the report week. The spot price for West Texas Intermediate (WTI) crude oil
decreased $3.70 per barrel on the week to $58.15 per barrel, or $10.03 per MMBtu.
Mild
temperatures early in the report week (March 7-14) led to widespread price decreases
across the Lower 48 States. Virtually all market locations recorded decreases
on the week, which ranged between 37 cents and $4.44 per MMBtu. Prices in the
Northeast recorded the largest weekly decreases of any region in the Lower 48
States, decreasing by an average of $2.68 per MMBtu. Despite these decreases,
spot prices in the Northeast remained the highest of any region as of yesterday
at an average of $7.32 per MMBtu. The price in the New York City area off
Transcontinental Gas Pipe Line (Transco) has dropped in five of the past six
trading sessions, trading yesterday at $7.40 per MMBtu and reflecting a net
decline for the week of $4.44 per MMBtu, or about 38
percent. For the week, prices along the Gulf Coast decreased between 52
and 78 cents per MMBtu. The Henry Hub spot price fell to $6.86 per MMBtu, which is 66 cents lower than last Wednesday's price
of $7.52 per MMBtu. Sizeable price decreases on the week were also recorded in
key space-heating markets in the Midwest despite the return of near-freezing
temperatures and moderate gains in yesterday's trading. As of yesterday, prices
in the Rockies were the lowest in the Nation at an average $5.64 per MMBtu, the
only regional price average below the $6-mark.
NYMEX
futures prices for months through the end of the next heating season (March 2008)
also decreased this week, with prices falling by an average of 23 cents per
MMBtu. The near-month contract (for April delivery) declined on the week by 28
cents per MMBtu, or 3.8 percent, as it settled yesterday at $7.083. On Tuesday,
March 13, the near-month contract decreased to $6.892 per MMBtu, the lowest
daily settlement price for the April 2007 contract since January 18. Yesterday,
the April contract settled $0.464 per MMBtu lower than the March contract's
final settlement price of $7.547 and slightly lower ($0.15 per MMBtu) than the
final settlement price of $7.233 for the April 2006 contract. Similarly, the May 2007 contract decreased 30
cents per MMBtu on the week, or about 4 percent, to settle yesterday at $7.189
per MMBtu. The 12-month strip, which is the average price for futures contracts
over the next 12 months, closed yesterday at $8.074 per MMBtu, 23 cents or
about 3 percent lower than its March 7 price of $8.306 per MMBtu. Prices for
contracts for the next winter heating season averaged yesterday $9.005 per
MMBtu, considerably higher than the near-term contracts and $2.15 more than
yesterday's spot price at the Henry Hub.
Recent Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Sep-06 |
Oct-06 |
Nov-06 |
Dec-06 |
Jan-07 |
Feb-07 |
5.51 |
5.03 |
6.43 |
6.65 |
5.92 |
6.66 |
|
Price ($ 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 was 1,516 Bcf, which is 158 Bcf or
11.6 percent, above the 5-year average, as of Friday, March 9, according to EIA's Weekly Natural Gas Storage Report (See
Storage Figure). The implied net withdrawal was 115
Bcf for the week, which is significantly higher than both the 5-year average
withdrawal of 79 Bcf and last year's withdrawal of 59 Bcf. The East region
recorded a net withdrawal of 92 Bcf, which is considerably above average for
the report week of 57 Bcf. The larger-than-average withdrawal was consistent
with the colder-than-normal temperatures that prevailed in the Northeast during
the report week. In the West region, on the other hand, warmer-than-normal
temperatures contributed to a net withdrawal of 1 Bcf, which is 88 percent
lower than the 5-year average withdrawal of 8 Bcf for the week. For the week
ended March 8, the coldest temperatures prevailed in the Northeast, where
temperatures were 22 percent colder than normal as measured by the National
Weather Service heating degree-days (HDDs) (See
Temperature Maps). The
only region in the Lower 48 States to record warmer-than-normal temperatures
for the report week was the Pacific Census Division, which recorded
temperatures that were 26 percent above normal.
Sound Waves Used To Turn Natural Gas Into Liquid: On
March 5, 2007, Los Alamos National Laboratory announced that the Swift LNG
Company has a new technology that turns natural gas into a usable liquid fuel.
The new process uses a thermoacoustic technology licensed by the Los Alamos
National Laboratory. This thermoacoustic
liquefier cools the natural gas to minus 160 degrees Celsius, which is the
temperature at which natural gas becomes liquefied.This thermoacoustic liquefaction is expected
to be more cost effective than current cryogenic technology and also would
serve as an option to oil producers that flare their associated natural gas. The
technology converts heat into sound waves and then converts the hot sound wave
energy to cold refrigeration using highly-pressurized helium contained in a
network of welded steel pipes. The system initially combusts a small fraction
of the natural gas to heat one end of the steel pipe network. The resulting
acoustic energy refrigerates the opposite end of the network, which cools the
rest of the natural gas. This new technology requires no moving parts, making
it potentially a more economical alternative to current liquefaction
operations. Swift LNG expects to have the thermoacoustic liquefaction technology
ready for commercial use by 2010.
EIA Reports Financial Results for
Independent Energy Companies: On
March 9, 2006, the Energy Information Administration (EIA) released the Financial
News for Independent Energy Companies, Fourth Quarter 2006, which includes financial information for 35
independent energy companies. These
companies are typically smaller than the major companies and do not have
integrated production and refining operations. According to EIA, total income for the 35 companies grew by 29 percent
in the fourth quarter of 2006 compared with earnings in the fourth quarter of
2005, mainly because of a 46-percent increase in the earnings of the 20
oil-field service companies covered by the report. The higher income for oil field companies was
driven by a higher worldwide rig count, which increased the demand for
equipment and services that these companies provide. In contrast, the net income of the 10 oil and
natural gas producing companies included in the report declined by 62 percent
from year-ago levels and earnings of the 5 marketer/refiner companies decreased
by 29 percent. The drop in earnings of producer companies was caused by a
41-percent decrease in the price of natural gas compared with fourth-quarter
2005 prices, while the decrease in earnings for marketer/refiner companies was
due to reduced refining margins. Over
the full year, all three groups of independent energy companies posted earnings
increases in 2006 compared with 2005.