for week ending August 8, 2007 | Release date: August 9, 2007 | Previous weeks
Overview: Thursday, August 9, 2007 (next release 2:00
p.m. on August 16, 2007)
The sweltering heat that engulfed most of the Lower
48 States for much of the report week led to natural gas spot price increases
at most locations this week (Wednesday-Wednesday, August 1-8). The Henry Hub
spot price increased 7 cents per MMBtu this week, or about 1 percent to $6.26. There
were, however, some price decreases on the week, as well. For example, trading
locations west of the Rocky Mountains decreased on the week between 7 and 14
cents per MMBtu. The price of the NYMEX futures contract for September delivery
also decreased by 13 cents since last Wednesday (August 1) to settle yesterday
at $6.220 per MMBtu. Natural gas in storage as
of Friday, August 3, was 2,882 Bcf, which is 16.4 percent
above the 5-year average. After reaching the all-time high of $78.20 per barrel
on July 31, the crude oil price decreased almost 8 percent. On the week, the
spot price for West Texas Intermediate (WTI) crude oil ended yesterday's
trading session at $72.23 per barrel ($12.45 per MMBtu)
after decreasing $4.26 per barrel (73 cents per MMBtu),
or 5.6 percent.
Above normal temperatures during the report week,
with 26 States east of the Rockies registering temperatures in the 80s and
above, resulted in upward spot price movement this week. Since Wednesday,
August 1, spot price increases were widespread and varied between 1 cent and
$1.56 per MMBtu. In all, more than two-thirds of trading locations in the Lower
48 States recorded net weekly increases. The Henry Hub spot price increased 7
cents on the week, ending trading yesterday at $6.26 per MMBtu. Other trading
locations in Louisiana all increased, reaching a regional average of $6.41 per
MMBtu, 17 cents higher than last Wednesday. Other producing regions along the
Gulf Coast also recorded increases on the week that ranged between 1 and 49
cents per MMBtu. The highest weekly increase occurred in Florida, where the
Florida Gas Transmission citygate price reached $8.96 per MMBtu after increasing
$1.56, in the wake of sustained high temperatures that exceeded 90 degrees.
Some trading locations, most notably those west of the Rockies, decreased on
the week, reflecting the cooler temperatures in California, Oregon, and
Washington. Prices in California decreased by an average of 9 cents per MMBtu
to $5.75, while prices in the Rocky Mountain region, on average experienced
nearly no change on the week (the average regional price increased by about 0.5
cents).
The price of the NYMEX futures contract for
September delivery decreased 13.2 cents since last Wednesday and settled at $6.220
per MMBtu yesterday. The October 2007 contract also
decreased on the week, ending trading yesterday 11.2 cents or 1.7 percent lower
than last Wednesday (August 1). Contracts for delivery during the next 12
months (September 2007 - August 2008) declined by an average of 18.6 cents per
MMBtu this week to settle at an average of $7.784 per MMBtu. Currently, the
highest priced contract is the February 2008 contract, which settled yesterday
at $8.599 per MMBtu. Current natural gas supplies are deemed sufficient to meet
both the ongoing high heat-induced space cooling demand as well as heating
demand during the upcoming heating season. These current market expectations resulted
in futures contract price decreases for delivery through December 2008. Futures
contract prices for delivery during the 2007-2008 heating season remain below
last year's prices for the 2006-2007 heating season contracts by an average of
$0.794 per MMBtu. The November 2007-through-March 2008 contracts traded
yesterday at an average of $8.238 per MMBtu, compared with the November 2006-through-March
2007 strip's price of $9.033 per MMBtu on August 8, 2006. Additionally,
contracts for delivery during the next heating season were trading at an
average premium of $1.97 per MMBtu relative to the Henry Hub spot price
yesterday, which is significantly lower than the premium of more than $3 that
the 2006-2007 heating season futures contracts exhibited 1 year ago.
Recent Natural Gas Market Data
Working gas in storage totaled 2,882 Bcf as of
Friday, August 3, according to EIA's Weekly Natural Gas Storage Report.
Working gas inventories are roughly 16 percent above the 5-year average for the
report week and about 4 percent above the level last year for the same week (see
Storage Figure) . This
week's net injection of 42 Bcf is about 7 percent lower than the 5-year average
injection for the week, and it sharply contrasts with last year's net
withdrawal of 7 Bcf for the report week. During the week ended August 2, the
National Weather Service reported temperatures that were 13 percent warmer than
normal as measured by cooling degree days (CDDs) (see
Temperature Maps). For the report week, temperatures in eight out of the nine Census
Divisions were warmer than normal, with CDDs exceeding normal levels between 1 and
65 percent. The Census Divisions that include large population centers in the
Northeast and the Midwest experienced temperatures that were around 30 percent
warmer than normal. Only the West South Central Census Division, which includes
the States of Arkansas, Louisiana, Oklahoma, and Texas, recorded temperatures
that were about 10 percent cooler than normal. However, this week's
temperatures were significantly lower than last year, when warmer-than-normal
temperatures resulted in a record level of electric power generation and a
storage net withdrawal.
EIA Releases
August 2007 Short-Term Energy Outlook: In its latest Short-Term
Energy Outlook (STEO), released August 7, the Energy
Information Administration (EIA) projects that the Henry Hub spot price will
average $7.45 per thousand cubic feet (Mcf) in 2007 which is $0.52 per Mcf more
then the 2006 average. Furthermore, EIA expects the average price to increase
to $8.06 per Mcf in 2008. These price
projections are influenced by the lack of hurricane activity in the Gulf of
Mexico. However, since the hurricane
season does not end until November, current price projections will remain open
to potential storm-related disruptions during the remainder of the hurricane
season. With natural gas serving as a
primary fuel source for meeting peak demand for summer cooling, temperatures
will continue to play a key role in determining natural gas consumption
throughout the third quarter. On an annual basis, total natural gas consumption
is expected to increase by 4 percent in 2007 and 1.3 percent in 2008. EIA projects an increase of 4.8 percent in
consumption of natural gas for electric power generation in 2007. The 2007 total dry natural gas production is
expected to increase by 0.8 percent, followed by another 1.5 percent in
2008. Liquefied natural gas (LNG)
imports are expected to decline for the remainder of the year as more cargoes
are directed to European and Asian markets. Despite the expected decline, total LNG imports are expected to reach a
record high of 850 billion cubic feet by the end of 2007.
Natural Gas
Transportation Update: