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Natural Gas Weekly Update Archive

for week ending May 2, 2007  |  Release date:  May 3, 2007   |  Previous weeks

Overview: Thursday, May 3, 2007 (next release 2:00 p.m. on May 10, 2007)

Since Wednesday, April 25, natural gas spot price movements were mixed in the Lower 48 States, with decreases principally occurring west of the Rocky Mountains and increases predominant to the east of the Rockies. Prices at the Henry Hub increased a nickel since Wednesday, April 25, to $7.64 per MMBtu. At the NYMEX, the futures contract for June delivery at the Henry Hub declined about 5 cents per MMBtu, or less than 1 percent since Wednesday, April 25, to settle at $7.730 per MMBtu yesterday (Wednesday, May 2). Natural gas in storage was 1,651 Bcf as of April 27, which is 19 percent above the 5-year average (2002-2006). The spot price for West Texas Intermediate (WTI) crude oil declined $1.55 per barrel on the week (Wednesday-Wednesday) to $63.78 per barrel or $11.00 per MMBtu.  



Spot price movements were mixed since last Wednesday, April 25, as moderate temperatures prevailed across most of the Lower 48 States.Moderating temperatures and easing industrial gas demand heading into the weekend likely contributed to significant price declines of up to 38 cents per MMBtu on Friday, April 27. However, prices recovered on Monday, April 30, with the return of the workweek, and summer-like temperatures, which contributed to increased power generation demand in parts of the Southeast.Since Wednesday, April 25, prices generally increased in the regions east of the Rockies, gaining up to 14 cents per MMBtu at most market locations. However, selected locations in the Midwest, Midcontinent, and Texas regions experienced larger price hikes of up to 35 cents per MMBtu. These spikes led to the largest average regional increases since last Wednesday, April 25, as prices rose between 8 and 12 cents per MMBtu on average in the Midwest, Midcontinent, and East Texas regions.Elsewhere, average regional price increases were less than 5 cents per MMBtu.West of the Rockies, prices generally declined. The Rocky Mountains region posted the lowest prices as prices fell by as much as 79 cents per MMBtu at selected locations and by 37 cents per MMBtu on average in the region. Transportation constraints in the region continued to contribute to relatively steep discounts at selected markets.Prices in the Arizona/Nevada region declined by 9 cents per MMBtu on average. The average price in California realized a gain of less than a penny since last Wednesday, April 25, as increases in northern market locations more than offset decreases in the southern markets. In general, prices exceeded levels reported last year at this time, with prices at the Henry Hub 96 cents per MMBtu or 14 percent above last year's level. As one exception, prices at selected markets in the Rocky Mountains region were about $1.05 per MMBtu or about 19 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 (June 2007 through May 2008) falling about 7 cents per MMBtu, or less than 1 percent, since last Wednesday, April 25. Reflecting conditions on the spot markets for natural gas, prices declined slightly in the futures markets. The price of the NYMEX futures contract for June delivery at the Henry Hub settled at $7.73 per MMBtu on Wednesday, May 2, falling about 5 cents per MMBtu, or less than 1 percent for the week. Prices for delivery in the refill season months (June through October) decreased by a little more, with an average decline of 7 cents per MMBtu.Overall, the 12-month futures strip (June 2007 through May 2008) traded at a premium of about $1.01 per MMBtu relative to the Henry Hub spot price, averaging $8.65 per MMBtu as of Wednesday, May 2. These relative pricing patterns reflect ample incentives for suppliers to inject natural gas into storage. The contract for May delivery at the Henry Hub expired on Thursday, April 26, at $7.508 per MMBtu, posting a decline of about 10 cents per MMBtu in its tenure as the near-month contract.    

Recent Natural Gas Market Data  

Estimated Average Wellhead Prices








Price ($ per Mcf)







Price ($ per MMBtu)







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 1,651 Bcf as of Friday, April 27, which is about 19 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 April 27, stocks were 245 Bcf below the 1,896 Bcf in storage at this time last year, yet still exceeded the 5-year average by 266 Bcf. On the week, net injections into working gas storage totaled 87 Bcf compared with the 5-year average injection of 54 Bcf and last year's net injection of 56 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 by significant margins in each of the Census Divisions east of the Rocky Mountains (see Temperature Maps). In the high gas-consuming areas of the New England, Middle Atlantic, and East North Central Census Divisions, heating degree-days, as reported by the National Weather Service, ranged between 33 and 36 percent below historical norms. Temperatures in the Pacific and Mountain Census Divisions exceeded historical norms by 17 and 4 percent, respectively.  


 Other Market Trends:

Natural Gas Deliveries Increase to End Users: Cold weather along with relatively stable prices during February 2007 led to significant increases in natural gas consumption in all four end-use sectors. According to the Energy Information Administration's (EIA) Natural Gas Monthly, natural gas deliveries to residential consumers totaled 32.1 Bcf per day during February 2007, which was about 24 percent higher than the 25.9 Bcf per day delivered in January and 29 percent higher than the February 2006 level. The year-to-date (through February) deliveries of 1.7 Tcf to residential consumers were nearly 21 percent higher than last year's total for the same period. A similar trend was observed in the commercial sector, where consumption totaled 17.1 Bcf per day in February, 23.0 percent above the January consumption in the sector of 13.9 Bcf per day and 21.3 percent higher than the volume in February 2006. A key factor behind the significant increase in residential and commercial consumption was the cold winter weather. As measured by National Weather Service heating degree-days (HDD), temperatures in February were 16 percent colder than normal and about 18 percent colder than for the same month last year, significantly boosting space-heating demand. Natural gas consumption by the electric power sector also increased 3 percent during the month, reaching 14.8 Bcf, which was 19.4 percent higher than the level in February 2006. Gas-fired generation in February was 17 percent of total net electricity generation in the United States. Deliveries to the industrial sector remained fairly stable year-over-year, increasing less than 3 percent in February 2007 (20.9 Bcf per day) over February 2006 (20.3 Bcf per day). However, the industrial sector experienced a 6.6 percent increase in consumption in February compared with January consumption of 19.6 Bcf per day.  

Natural Gas Transportation Update:

  • An Overage Alert Day was declared by Florida Gas Transmission Company for Thursday and Friday, April 26 and 27, and again on Tuesday, May 1, because of hot temperatures and decreasing linepack.On all 3 days, there was a 25 percent tolerance for negative daily imbalances.
  • Southern California Gas Company declared a high-linepack Operational Flow Order (OFO) for Saturday and Sunday, April 28 and 29, and again on Thursday, May 3.During the OFO customers who delivered more than 110 percent of their actual gas usage into the system would be assessed for charges.
  • Pacific Gas and Electric Company issued a systemwide Stage 2 high-inventory OFO for Saturday, April 28.Penalties were set at $1 per decatherm (Dth), and the tolerance for positive daily imbalances was 18 percent.The OFO was not extended past Saturday.
  • Unplanned pipeline work on Friday and Saturday, April 27 and 28, caused El Paso Corporation to reduce capacity on the North Mainline between the Navajo and Dilkon Compressor stations in Arizona from 2,276 million cubic feet (MMcf) per day to about 2,150 MMcf per day.
  • Mississippi River Transmission Corporation (MRT) is currently undergoing an annual maintenance outage at Unionville Station in Louisiana. The outage, which is expected to last until May 15, will reduce capacity to 102,000 Dth per day. The project is one of multiple pipeline integrity projects that MRT has planned across its system, as required by Federal regulations.
  • Southern Natural Gas Company (SNG) announced on Tuesday, May 1, that the first phase of the Cypress Pipeline Project has been placed into service. The 167-mile pipeline extends from the company's liquefied natural gas facility in Elba Island, Georgia, to southern Georgia and northern Florida, and has an interconnect with the Florida Gas Transmission Company system in Jacksonville, Florida. The incremental takeaway capacity from the Elba Island facility is 220 MMcf per day.


Short-Term Energy Outlook