for week ending April 4, 2007 | Release date: April 5, 2007 | Previous weeks
Overview: Thursday, April 5, 2007 (next release 2:00
p.m. on April 12, 2007)
Since
Wednesday, March 28, natural gas spot prices generally increased at most market
locations in the Lower 48 States, while declining at selected markets. Prices at the Henry Hub declined a penny since
Wednesday, March 28, to $7.46 per MMBtu.At the NYMEX, the futures contract for May delivery at the Henry Hub
declined 16 cents per MMBtu, or about 2 percent since Wednesday, March 28, to
settle at $7.515 per MMBtu yesterday (Wednesday, April 4). Natural gas in storage was 1,569 Bcf as of March
30, which is 27 percent above the 5-year average (2002-2006). The spot price for West Texas Intermediate
(WTI) crude oil increased 29 cents per barrel on the week (Wednesday-Wednesday)
to $64.40 per barrel or $11.10 per MMBtu.
Spot prices increased at most market locations since
last Wednesday, March 28.A return to
winter-like conditions across large portions of the Lower 48 States, including
the Northeast, Midwest, South, and Pacific Northwest, likely contributed to the
price increases, as cold temperatures increased heating demand for natural gas. The increased heating demand for natural gas
likely competed with injection demand for natural gas as many storage operators
in parts of the Lower 48 States began replenishing their working gas
stocks. Pricing patterns were mixed
since last Wednesday, March 28, as a little more than half of the market
locations in the Lower 48 States posted gains ranging between $0.20 and $1.00
per MMBtu, while the remaining markets were within 19 cents per MMBtu on either
side of last Wednesday's level. Price
increases since last Wednesday, March 28, ranged between 30 and 87 cents per
MMBtu on average in Texas and averaged 84 cents per MMBtu in the Arizona and
Nevada markets. Despite posting the
largest average gains since last Wednesday, March 28, the West Texas and
Nevada/Arizona regions traded at a discount relative to other regions in the
Lower 48 States, with spot prices averaging $6.81 and 6.96 per MMBtu. Meanwhile,
prices in the Rocky Mountains and Louisiana regions gained 22 and 3 cents per
MMBtu on average, respectively-among the smallest average regional increases in
the Lower 48 States since last Wednesday, March 28. Prices in the Rocky Mountains region were
unusually volatile in trading since last Wednesday, March 28. This increased variability doubtlessly
resulted in part from work at the Clay Basin Storage facility that began on
March 27, which caused a supply glut at most market locations in the region
leading to price declines Monday, April 2, ranging between $1.35 and $2.75 per
MMBtu. The price at the Northwest
Pipeline trading location in northwest Colorado/south Wyoming fell to $1.78 on
April 2-the lowest level since November 13, 2006.Nevertheless, prices at the Rocky Mountains market
locations increased in trading on Tuesday, April 3, with gains between $1.23
and $2.49 per MMBtu. At an average price
of $5.40 per MMBtu on Wednesday (April 4), prices in the region are among the
lowest in the Nation and are more than $2 below the Henry Hub. Prices at the key consuming regions of the
Midwest and Northeast increased 8 cents and 40 cents per MMBtu on average since
last Wednesday, March 28, climbing to $7.59 and $8.36 per MMBtu,
respectively. In general, prices exceeded
levels reported last year at this time, with prices at the Henry Hub 44 cents per
MMBtu or 6 percent above last year's level, while prices in the Rocky Mountains
region were about 46 cents per MMBtu or about 8 percent below last year's level.
At the NYMEX, prices for the futures contracts for the
next 12 months decreased across the board with the 12-month futures strip (May 2007
through April 2008) falling about 12 cents
per MMBtu, or about 1 percent, since last Wednesday, March 28. Prices declined
slightly in the futures markets as the end of the winter season approached and
supply concerns lessened with the expectation that storage stocks would end the
heating season at the second-highest level in at least 15 years. The price of the NYMEX futures contract for May
delivery at the Henry Hub settled at $7.515 per MMBtu on Wednesday, April 4, falling
about 16 cents per MMBtu, or 2 percent. Prices for delivery in the ensuing refill season months (June through
October) decreased by a little more, with declines ranging between 16 and 18
cents per MMBtu. Overall, the 12-month
futures strip (May 2007 through April 2008) traded at a premium of about $1.03 per
MMBtu relative to the Henry Hub spot price, averaging $8.49 per MMBtu as of
Wednesday, April 4.
Recent Natural Gas Market Data
Estimated Average Wellhead Prices |
||||||
|
Oct-06 |
Nov-06 |
Dec-06 |
Jan-07 |
Feb-07 |
Mar-07 |
5.03 |
6.43 |
6.65 |
5.92 |
6.66 |
6.59 |
|
Price ($ per MMBtu) |
4.90 |
6.26 |
6.48 |
5.76 |
6.48 |
6.42 |
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 1,569 Bcf as of Friday, March
30, which is about 27 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 30, stocks were
127 Bcf below the 1,696 Bcf in storage at this time last year, yet still
exceeded the 5-year average by 337 Bcf. On the week, net injections into working gas
storage totaled 58 Bcf compared with the 5-year average withdrawal of 12 Bcf
and last year's net withdrawal of 24 Bcf for the same report week. Warmer-than-normal temperatures likely
contributed to the above-normal injections as heating degree-days fell below
both the normal level and last year's level by significant margins in each of the
Census Divisions (see Temperature Maps).
In the high gas-consuming areas of the New England, Middle Atlantic, and East
North Central Census Divisions, heating degree-days ranged between 15 and 65
percent below historical norms. The
Pacific and Mountain Census Divisions fell below historical norms by 10 and 19
percent, respectively.
Other Market Trends:
Active 2007
Atlantic Hurricane Season Projected: The 2007 Atlantic hurricane season is expected to be
much more active than the average (1950-2000) season according to forecasts by
Colorado State University's Tropical Meteorology Project.Updated forecasts were released on Tuesday,
April 4, 2007, in a report by Philip J. Klotzbach and William M. Gray titled Extended Range Forecast of Atlantic Seasonal
Hurricane Activity and U.S. Landfall Strike Probability for 2007. The authors expect that net tropical cyclone
activity in 2007 will be about 185 percent of the long-term (1950-2000) average
with 17 named storms (compared with an average of 9.6), 9 hurricanes (compared
with 5.9), and 5 intense hurricanes (compared with 2.3). The report also predicts U.S. major hurricane
landfall will be about 140 percent of the long-period average. The increased hurricane activity forecasts
are mainly due to rapid dissipation of El Niño conditions and warm sea surface
temperatures in the Atlantic Ocean combined with weak to moderate or neutral La
Niña conditions. Typically, during the
U.S. spring and summer months, La Niña conditions do not significantly impact
overall inland temperature and precipitation patterns. However, La Niña
episodes often have an effect on Atlantic and Pacific hurricane activity.
EIA Releases Overview of the Natural Gas Industry and Markets in 2006:
The
Energy Information Administration (EIA) released a special report on March 30,
2007, detailing the natural gas industry and markets in 2006.This summary article, titled Natural Gas Year-in-Review 2006, is intended
to coincide with the first appearance of supply and disposition data for 2006
from EIA, released in the February 2007
Natural Gas Monthly.According to Natural Gas Year-in-Review 2006,
tightness in natural gas markets was somewhat alleviated in 2006 because of
lower winter heating demand, higher-than-average storage inventories, and
growth in onshore production.Markets
were further aided by a relatively calm hurricane season, which allowed for
continued recovery from the major 2005 hurricanes.Consequently, most natural gas prices
declined since the record high prices in late 2005.Warmer-than-normal temperatures throughout
most of 2006 allowed for reduced heating demand and limited withdrawals from
storage during the winter months, but prompted demand for natural-gas-fired
power generation during the summer months. Overall, natural gas consumption in
2006 was between 2 and 9 percent lower than in 2005 in the residential,
commercial, and industrial sectors, but 6 percent higher in the electric power
sector.Total marketed production of
natural gas increased 2 percent over 2005 levels, despite significant declines
from the Federal Gulf of Mexico.Marketed production outside the Federal Gulf of Mexico was 4 percent
more than in 2005, reflecting record onshore drilling rates and significant
development of pipeline mileage and capacity.The net volume of natural gas imports declined 5 percent from 2005 to
2006.Canadian imports decreased for the
first time in 3 years and the volume of imported liquefied natural gas (LNG)
declined as well.Most of the data for
this article were derived from weekly and monthly EIA products. Final data for 2006 will be released
in the Natural Gas Annual 2006, which is scheduled to be released in
December 2007.
Natural Gas Transportation Update: