for week ending March 28, 2007 | Release date: March 28, 2007 | Previous weeks
Overview: Thursday, March 29, 2007 (next release 2:00
p.m. on April 5, 2007)
Natural gas spot prices increased at almost all market
locations in the Lower 48 States by as much as 82 cents per MMBtu since
Wednesday, March 21, 2007.For the week
(Wednesday - Wednesday, March 21 to 28), the spot price at the Henry Hub increased
by 65 cents, or about 10 percent, to $7.47 per MMBtu. The price of the NYMEX futures contract for April
delivery settled at $7.558 per MMBtu yesterday (March 28), which is 40 cents,
or about 6 percent, more than last Wednesday. As of Friday, March 23, 2007, natural gas in storage was 1,511 Bcf or 21.5
percent above the 5-year average. The
spot price for West Texas Intermediate (WTI) crude oil was $64.11 per barrel or
$11.05 per MMBtu yesterday. This price
is $7.13 per barrel, or about 13 percent, more than the price last week and is
the highest WTI spot price since September 11, 2006.
Although the weather was warmer
than normal for the country as a whole, cold temperatures in the Northeast and
Midwest along with a significant rise in the crude oil price placed upward
pressure on natural gas prices during the report week (Wednesday to Wednesday,
March 21 to 28). As of Tuesday, spot
price movements were mixed, but forecasts for cooler weather led to widespread
increases in yesterday's trading (March 28) leaving spot prices at almost all
market locations higher than levels of the previous Wednesday.Locations in Louisiana exhibited some of the
largest price gains with an average regional price increase of 67 cents per
MMBtu for the week. The Henry Hub spot
price increased 65 cents per MMBtu, or about 10 percent, to finish the week at
$7.47 per MMBtu yesterday.The average
price in Louisiana was $7.43 per MMBtu yesterday. The Northeast, which still has significant
heating needs because of cold temperatures, also experienced significant prices
increases at all market locations, ranging between 60 and 82 cents per
MMBtu. The average price in the
Northeast was $7.96 per MMBtu yesterday, which is about 9 percent more than the
price last Wednesday. Price increases
were more modest at most locations in the Midcontinent and the West including
the Rockies, California, Arizona, and Nevada, where only a few prices were more
than 50 cents above levels of the previous Wednesday.
At
the NYMEX, the price of the natural gas futures contract for April 2007 delivery
at the Henry Hub increased 40 cents or about 6 percent to $7.558 per MMBtu
since last Wednesday, March 21.In its
last day of trading before expiring, the April 2007 contract settled at $7.558
per MMBtu yesterday (March 28), which is the highest price for the contract
during its term as the near-month contract. For comparison, this price is slightly higher than the expiration prices
of corresponding contracts in previous years. The April 2006 contract expired
at $7.233 per MMBtu, and the April 2005 contract expired at $7.323 per MMBtu. The prices for all contracts over the next
year increased with gains ranging between 35 cents (February 2008 and March
2008) and 41 cents (May 2007, June 2007, and July 2007). The 12-month strip, which is the average of
the monthly futures prices for the coming year, increased about 38 cents this
week to settle at $8.571 per MMBtu yesterday. This includes an average contract price of $7.912 per MMBtu for the
injection season months (April 2007 to October 2007) and an average contract
price of $9.493 per MMBtu for the heating season months (November 2007 to March
2008). All of the contract prices hold a
significant premium to the Henry Hub spot price of $7.47 per MMBtu, which provides
economic incentive to avoid using natural gas from storage.
Estimated Average Wellhead Prices |
||||||
|
Sep-06 |
Oct-06 |
Nov-06 |
Dec-06 |
Jan-07 |
Feb-07 |
5.51 |
5.03 |
6.43 |
6.65 |
5.92 |
6.66 |
|
Price ($ 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 1,511 Bcf as of Friday, March 23, which is 21.5 percent
above the 5-year average, according to EIA's Weekly Natural Gas Storage Report (see Storage Figure). The implied net withdrawal of 22 Bcf is less
than half of the 5-year average withdrawal of 50 Bcf, and less than a quarter
of last year's net withdrawal of 92 Bcf. With only about 1 week remaining in the heating season, stock levels
currently exceed the 5-year average by 267 Bcf, which is the largest overhang
of this type since the week ending February 9, 2007. However, current stock levels are 209 Bcf
less than the last year's level.Regional weather patterns largely influenced storage activity during the
report week. According to the National
Weather Service's heating degree-days for the week ending March 22, 2007,
temperatures were between 4 and 22 percent colder than normal in four eastern
Census Divisions: New England, Middle Atlantic, East North Central and South
Atlantic (see Temperature Maps). These cold temperatures are reflected in a 41
Bcf implied net withdrawal in the East Storage Region, which is equal to the
5-year average in this region.Temperatures were warmer than normal for the rest of the country, which
corresponds to net injections of 6 Bcf and 13 Bcf in the West and Producing
Regions, respectively. The 5-year
average net change for this week is a withdrawal of 4 Bcf in each of these two
regions. If the net withdrawal in the
United States next week matches the 5-year average of 12 Bcf, working gas in
storage will be around 1,500 Bcf at the end of the heating season, which would
be about 22 percent above the 5-year average.
MMS Announces Results of RIK Sale: The Department of the Interior's Minerals Management
Service (MMS) announced on March 27, 2007, that the Federal Government should
receive more than $1 billion in revenue following a successful royalty-in-kind
(RIK) sale of natural gas. The sale will deliver about 137 Bcf of RIK natural
gas or about 398,300 MMBtu per day, enough to supply the average natural gas
needs of about 1.7 million homes for 1 year. The revenue was valued at more
than $1 billion at the current natural gas price of $7.50 per MMBtu; however,
actual revenues may vary based on natural gas prices over the life of the
contracts. The natural gas will be delivered beginning April 1, 2007, over 7-
or 12-month terms to 13 offshore pipeline systems originating in the Gulf of
Mexico, and is slated for end use in the continental United States. A total of
20 companies submitted 152 bids for the 13 sales packages offered. Ten companies were awarded contracts
including Williams Power Company, BG Group, and Constellation Energy
Commodities Group Inc.