for week ending June 27, 2007 | Release date: June 28, 2007 | Previous weeks
Overview: Thursday, June 28, 2007 (next release 2:00
p.m. on July 6, 2007)
Since
Wednesday, June 20, natural gas spot prices decreased at virtually all markets
in the Lower 48 States outside the Rocky Mountains and Northeast regions. Prices at the Henry Hub declined 65 cents per
MMBtu, or 9 percent, since Wednesday, June 20, to $6.74 per MMBtu, posting its
lowest level since March 19. At the
NYMEX, the futures contract for July delivery at the Henry Hub expired yesterday
(June 27) at $6.929 per MMBtu, falling 46 cents per MMBtu, or 6 percent since
last Wednesday, June 20. During its
tenure as the near-month contract, the futures contract for July delivery at
the Henry Hub posted a decline of $1.012 per MMBtu or nearly 13 percent. Natural gas in storage was 2,443 Bcf as of June
22, which is 18 percent above the 5-year average (2002-2006). The spot price for West Texas Intermediate
(WTI) crude oil gained $0.48 per barrel on the week (Wednesday-Wednesday) to $68.98
per barrel or $11.89 per MMBtu.
Natural gas prices fell at virtually all market
locations since last Wednesday, June 20, with declines of 50 to 90 cents per
MMBtu or about 6 to 12 percent prevailing at most market locations. Overall softness in the natural gas market
likely accounted for the widespread declines, as gradually warming temperatures
in some areas of the Lower 48 States were insufficient to reverse the trend of
declining prices. On a regional basis,
price declines averaged between 24 and 83 cents per MMBtu, or 3 and 12 percent,
since last Wednesday, June 20.The
largest price decreases since last Wednesday, June 20, occurred principally in
the California, West Texas, and Arizona/Nevada regions, where prices fell by
more than 81 cents per MMBtu on average.By far the smallest decreases occurred in the Northeast and Rocky
Mountains regions, where prices fell by 24 and 31 cents per MMBtu on average,
respectively. Several market locations in the Northeast and Rocky Mountains
regions reported slight gains since Wednesday, June 20, because of significant electric
generation demand for natural gas. The
New York citygate posted the highest price in the Lower 48 States and largest
price hike since last Wednesday, June 20, climbing 11 cents per MMBtu to $8.13
per MMBtu.Elsewhere, average price decreases
by region exceeded 53 cents per MMBtu. Despite
these declines, prices generally exceeded levels reported last year at this
time, with prices at the Henry Hub $0.77 per MMBtu or 13 percent above last
year's level. The principal exception to
the year-over-year price increases occurred in the Rocky Mountains region, where
prices at selected markets were between $1.58 and $1.78 per MMBtu or about 30 and
33 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 41 cents per MMBtu, or about 5 percent, since
last Wednesday, June 20. The price of the NYMEX futures contract for July delivery
at the Henry Hub expired at $6.929 per MMBtu on Wednesday, June 27, falling 46
cents per MMBtu, or 6 percent, since last Wednesday, June 20. At $6.929 per MMBtu, the July 2007 contract
recorded the lowest expiry price since the February 2007 contact expired at
$6.917 per MMBtu. Prices for delivery in the ensuing months through the end of
the upcoming heating season (March 2008) decreased between 44 and 51 cents per
MMBtu.Overall, the 12-month futures
strip (July 2007 through June 2008) traded at a premium of about $1.31 per
MMBtu relative to the Henry Hub spot price, averaging $8.05 per MMBtu as of
Wednesday, June 27.These relative
pricing patterns reflected ample incentives for suppliers to inject natural gas
into storage, increasing the spot price of gas relative to the 12-month futures
strip.
Estimated Average Wellhead Prices |
||||||
|
Dec-06 |
Jan-07 |
Feb-07 |
Mar-07 |
Apr-07 |
May-07 |
6.65 |
5.92 |
6.66 |
6.56 |
6.84 |
6.98 |
|
Price ($ per MMBtu) |
6.48 |
5.76 |
6.48 |
6.39 |
6.66 |
6.80 |
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 2,443 Bcf as of Friday, June
22, which is 18 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 June 22, stocks were 90 Bcf below the 2,533 Bcf in storage at this time
last year, yet still exceeded the 5-year average by 372 Bcf. This marks the ninth consecutive week that
storage levels increased relative to last year's level. On the week, net
injections into working gas storage totaled 99 Bcf compared with the 5-year
average injection of 92 Bcf and last year's net injection of 68 Bcf for the
same report week. Moderate temperatures
throughout the Lower 48 States likely contributed to the above-normal injections
(see
Temperature Maps). Nevertheless,
cooling degree-days were 15 percent above normal levels on average in the Lower
48 States, exceeding normal levels in each of the Census Divisions outside of
the West South Central region.
Natural Gas Rigs Drilling Reaches
Another Record: Surpassing the
previous week's record-matching level, the number of rigs drilling for natural
gas increased to 1,495 for the week ended June 22, 2007. According to the data
published by Baker-Hughes Incorporated, this was the highest gas-directed rig
count since record keeping by fuel type began in 1987. The number of natural
gas rigs increased by 11 rigs over the previous week's count of 1,484.
Furthermore, rigs drilling were about 9 percent higher than last year at this
time, and more than 43 percent above the 5-year (2002-2006) average for the
report week. So far this year, the rig count each week has exceeded the number
of rigs drilling during the corresponding week of 2006.Natural gas rigs drilling remained
consistently above 1,400 since the report week ended December 1, 2006,
continuing the upward trend that has been apparent since 2002. Additionally,
the number of rigs drilling between December 1, 2006, and June 22, 2007, was
more than 10 percent higher than year-earlier levels. Historically high natural
gas prices are a key factor motivating this relatively high level of
drilling. Spot natural gas prices at the
Henry Hub have averaged $7.28 per MMBtu since December 1, about 8 percent
higher than the average price for the year-ago values during the same period.