for week ending April 25, 2007 | Release date: April 26, 2007 | Previous weeks
Overview: Thursday, April 26, 2007 (next release 2:00
p.m. on May 3, 2007)
Natural
gas spot prices increased slightly at most market locations outside the
Northeast and the Rockies since Wednesday, April 18, 2007. For the week (Wednesday, April 18, to Wednesday,
April 25), the spot price at the Henry Hub increased 5 cents, or less than 1
percent, to $7.59 per MMBtu. The price
of the NYMEX futures contract for May delivery settled at $7.689 per MMBtu
yesterday (April 25), which is 19 cents or about 3 percent more than last
Wednesday's level. As of Friday, April 20,
2007, natural gas in storage was 1,564 Bcf, which is 17.5 percent above the 5-year
average. The spot price for West Texas
Intermediate (WTI) crude oil was $65.33 per barrel or $11.26 per MMBtu as of
yesterday. This is $2.19 per barrel more
than the price last week, an increase of about 3 percent.
Spring like temperatures finally arrived across most of
the Lower 48 States this week after an unusually cool first few weeks of
April. As weather-induced heating load
eased, natural gas spot prices softened during the beginning of the report week
(Wednesday, April 18 to Wednesday, April 25). As of Monday, prices at almost every trading
location had declined by as much as 89 cents per MMBtu. However, a return of colder weather increased
prices in the last 2 days of trading, offsetting most of the declines at
locations outside the Northeast and the Rockies.The Henry Hub spot price increased 5 cents on
the week, or less than 1 percent, to settle at $7.59 per MMBtu yesterday.After significant declines through Monday's
trading day, spot prices in Louisiana gained an average of 37 cents per MMBtu during
Tuesday and Wednesday's trading. The
average regional spot price in Louisiana was $7.57 per MMBtu yesterday, which
is about 8 cents, or 1 percent, more than the previous Wednesday's price. In the Northeast, prices had declined between
27 and 78 cents per MMBtu as of Monday. Late-week
gains, however, were not enough to offset the declines. The average regional price in the Northeast was
$8.16 per MMBtu yesterday, which is 22 cents, or about 3 percent, less than the
price last Wednesday. The pattern was
similar in the Rockies where increases brought on by a late-season snow storm
were not enough to offset the early week decreases at many locations. Prices declined by an average of 12 cents per
MMBtu in this region to settle at an average regional price of $5.93 per MMBtu
yesterday. Several locations in the
Rockies are currently trading at prices up to 89 cents per MMBtu less than the
price last year, whereas prices at almost every other trading location in the
Lower 48 States are higher than last year by as much as $1.12.
At
the NYMEX, the price of the futures contract for May delivery at the Henry Hub increased
to $7.689 per MMBtu yesterday, which is 19 cents, or about 3 percent, more than
the price last Wednesday. The contract prices
exhibited a trend similar to that of prices at most spot markets, dropping
about 11 cents in the first 3 days of trading before gaining 30 cents during
Tuesday and Wednesday's trading. All
natural gas futures contract prices listed on the NYMEX also increased between
2 and 3 percent this week, with contracts for next winter increasing slightly
more (between 18 and 22 cents) than the June through October 2007 contracts
(between 14 and 15 cents). The large differential
between the Henry Hub spot price and the futures contract prices for next
winter reflects uncertainty concerning potential demand and supply fluctuations
during the refill season. Heat-induced
cooling demand or supply disruptions related to hurricanes could create
significant upward price pressure. The
current large price premium provides economic incentives to inject natural gas
into storage. At $9.921 per MMBtu, the
January 2008 contract held a $2.33 premium to the Henry Hub spot price
yesterday. The 12-month strip, or the average price for contracts over the next year
(May 2007 - April 2008), closed yesterday at $8.68 per MMBtu, which is 19 cents
more than the price last Wednesday, and $1.08 more than the Henry Hub spot price.
Estimated Average Wellhead Prices |
||||||
|
Oct-06 |
Nov-06 |
Dec-06 |
Jan-07 |
Feb-07 |
Mar-07 |
5.03 |
6.43 |
6.65 |
5.92 |
6.66 |
6.59 |
|
Price ($ 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 inventories increased to 1,564 Bcf as of Friday, April 20, according to
EIA's Weekly Natural Gas Storage Report
(see Storage Figure). Stocks are currently 233 Bcf, or 17.5
percent, above the 5-year average of 1,331 Bcf for the report week, but 15
percent below last year's level of 1,840 Bcf.The implied net injection of 18 Bcf is relatively small compared with
both the 5-year average net injection of 65 Bcf and last year's net injection
of 77 Bcf. Unseasonably cool
temperatures during the report week likely contributed to the
lower-than-average net injection as natural gas demand for heating needs remained
strong. As measured by National Weather
Service's heating degree days, temperatures were coldest in New England, Middle
Atlantic, and East North Central Census Divisions, where key demand markets are
located (see Temperature Maps). Temperatures were 15 to 32 percent colder
than normal in these areas. The East
Storage Region, which contains these Census Divisions, had the smallest net
injection this week at 1 Bcf compared with 6 Bcf in the West Region and 11 Bcf
in the Producing Region. Temperatures
for the United States as a whole were 27 percent colder than normal.
FERC Proposes New Rules on Price
Transparency in Natural Gas Markets:
On April 19, the Federal Energy Regulatory Commission (FERC) announced a Notice
of Proposed Rulemaking (NOPR) intended to facilitate price transparency in
markets for the sale and transportation of physical natural gas in interstate
commerce. In order to implement its authority under Section 23 of the Natural
Gas Act, which was added by Section 316 of the Energy Policy Act of 2005, FERC
proposes to revise its regulations and to require that intrastate pipelines
post daily capacities of, and volumes flowing through, their major receipt and
delivery points and mainline segments in order to track daily flows of natural
gas throughout the United States. Furthermore, FERC would require that buyers
and sellers of more than a de minimis volume of natural gas report annual
numbers and volumes of relevant transactions to the FERC to allow an estimate
of the size of the physical U.S. natural gas market, assess the importance of
the use of index pricing in that market, and determine the size of the
fixed-price trading market that produces the information. Additionally, each
holder of blanket marketing certificate authority or blanket unbundled sales
services certificate authority would be required to notify the FERC as to
whether it reports its transactions to publishers of electricity or natural gas
price indices and whether such reporting conforms to certain standards.
Currently, the FERC requires notification only if blanket certificate holders
change their reporting practices; the new notification requirement would make
notifications of reporting status more reliable. The proposed revisions would
facilitate price transparency in physical markets for the sale or
transportation of natural gas in interstate commerce, as well as protect the
integrity of wholesale gas markets, and improve FERC's ability to assess market
forces and detect market manipulation. Comments on the NOPR are due 45 days
after its publication in the Federal
Register on April 26.