for week ending May 30, 2007 | Release date: May 31, 2007 | Previous weeks
Overview: Thursday, May 31, 2007 (next release 2:00
p.m. on June 7, 2007)
Since
Wednesday, May 23, natural gas spot prices generally increased at most markets
in the Lower 48 States outside the Rocky Mountains and Midcontinent
regions. Prices at the Henry Hub climbed
18 cents per MMBtu, or 2 percent, since Wednesday, May 23, to $7.71 per MMBtu. At the NYMEX, the futures contract for July
delivery at the Henry Hub settled yesterday (May 30) at $7.941 per MMBtu,
equaling its value last Wednesday, May 23. The futures contract for June delivery at the Henry Hub expired on
Tuesday, May 29, at $7.591 per MMBtu, posting a decline of 24 cents per MMBtu
or about 3 percent during its tenure as the near-month contract. Natural gas in storage was 2,053 Bcf as of May
25, which is 21 percent above the 5-year average (2002-2006). The spot price for West Texas Intermediate
(WTI) crude oil declined $1.63 per barrel on the week (Wednesday-Wednesday) to
$63.47 per barrel or $10.94 per MMBtu.
Natural gas prices increased up to 25 cents per MMBtu on
average at most market locations since last Wednesday, May 23, while prices in
the Midcontinent and Rocky Mountains regions posted declines of up to 25 cents
per MMBtu. Heading into the Memorial Day
holiday weekend on Friday, May 25, natural gas spot prices declined at
virtually all market locations in the Lower 48 States, as mild temperatures and
expected lower industrial demand during the holiday weekend contributed to
downward pressure on prices. Falling
prices on Friday, May 25, were particularly pronounced in the Rocky Mountains
region where regional transportation constraints resulted in a supply glut that
led prices at selected market locations in the region to fall to as low as
$2.01 per MMBtu. Nevertheless, the
return of industrial demand and increased power generation demand following the
Memorial Day holiday (May 28), as well as injection demand for natural gas, contributed
to a price rally that more than offset the earlier declines at most market
locations. The largest price increases
since last Wednesday, May 23, occurred principally in the Northeast, East
Texas, and Florida regions, where average prices increased by 31, 26, and 25
cents per MMBtu, respectively. In other
regions, average price increases by region since last Wednesday, May 23, ranged
between 8 and 18 cents per MMBtu. The exceptions
to this pattern of increasing regional prices occurred in the Rocky Mountains
and Midcontinent regions, where prices declined 5 and 14 cents per MMBtu on
average since last Wednesday, May 23. In general, prices exceeded levels reported
last year at this time, with prices at the Henry Hub $1.50 per MMBtu or 24 percent
above last year's level. The principal exception
occurred in the Rocky Mountains region, where prices at selected markets were between
$1.70 and $2.19 per MMBtu or about 33 and 44 percent below last year's level.
At the NYMEX, prices for the futures contracts for delivery
in the next 12 months generally decreased with the 12-month futures strip (July
2007 through June 2008) falling about 2 cents per MMBtu, or less than 1 percent,
since last Wednesday, May 23. The price of the NYMEX futures contract for July delivery
at the Henry Hub settled at $7.941 per MMBtu on Wednesday, May 30, equaling its
level last Wednesday, May 23. Prices for
delivery in the ensuing months through the end of the upcoming heating season (March
2008) decreased between 1.5 and 4.3 cents per MMBtu. Overall, the 12-month futures strip (July
2007 through June 2008) traded at a premium of about $1.08 per MMBtu relative
to the Henry Hub spot price, averaging $8.79 per MMBtu as of Wednesday, May 30,
declining from a premium of $1.28 per MMBtu as of Wednesday, May 23. These relative pricing patterns reflected
ample incentives for suppliers to inject natural gas into storage, increasing
the spot price of gas relative to the 12-month futures strip. The contract for June delivery at the Henry
Hub expired on Tuesday, May 29, at $7.591 per MMBtu, posting a decline of about
24 cents per MMBtu in its tenure as the near-month contract.
Estimated Average Wellhead Prices |
||||||
|
Nov-06 |
Dec-06 |
Jan-07 |
Feb-07 |
Mar-07 |
Apr-07 |
6.43 |
6.65 |
5.92 |
6.66 |
6.56 |
6.84 |
|
Price ($ per MMBtu) |
6.26 |
6.48 |
5.76 |
6.48 |
6.39 |
6.66 |
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 2,053 Bcf as of Friday, May
25, which is about 21 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 May 25, stocks were
179 Bcf below the 2,232 Bcf in storage at this time last year, yet still
exceeded the 5-year average by 355 Bcf. This marks the fifth consecutive week that
storage levels increased relative to both last year's level and the 5-year
average. On the week, net injections into working gas storage totaled 107 Bcf
compared with the 5-year average injection of 86 Bcf and last year's net
injection of 81 Bcf for the same report week.Moderate temperatures throughout the Lower 48 States likely contributed
to the above-normal injections (see Temperature Maps).
Both cooling and heating degree-days were significantly below normal levels on
average in the Lower 48 States.
First Quarter Financial Performance of
Independent Energy Companies: According to a report released on May 30,
total net income of 41 independent energy companies tracked by the Energy
Information Administration (EIA) was $4,578 million during the first quarter of
2007, which is more than 39 percent higher than amounts reported for the first
quarter of 2006. Independent energy companies typically are smaller than the
major U.S. energy companies and do not have integrated production and refining
operations. The report includes data for
three types of companies:oil and gas
producers, oil field companies, and refiners/marketers. Total revenue in the
first quarter of 2007 increased 23 percent year-over-year to $32,337
million. The higher net incomes are
partly attributed to the performance of oil field service companies and the
refineries/marketers. Net income of U.S. oil field service companies increased
by about 43 percent and revenues increased by almost 28 percent year-over-year. Income for independent refiners increased
from $37 million during the first quarter in 2006 to $248 million in the first
quarter in 2007. The increase in net
income for refiners reflects an increase in U.S. gross refining margins of
about 10 percent over the year-ago quarter.In contrast, oil and natural gas producers had declines in earnings
compared with earnings in the first quarter of 2006. Net income of the oil and gas producers in
the first quarter of 2007 declined by about 61 percent compared with that of
the first quarter of 2006, while revenues rose by more than 2 percent. Both natural gas and crude oil prices
declined by 15 percent and 3 percent, respectively, compared with levels in the
first quarter of 2006. The worldwide rig
count in the first quarter of 2007 was 3,247, which reflects a 5 percent increase
over rigs in the first quarter of 2006. For the United States, the rig count grew 14 percent for the same
period. This quarter marks the 16th consecutive quarter that the U.S. natural gas
rig counts have increased over year-earlier counts.
Natural Gas Transportation Update: