for week ending October 10, 2007 | Release date: October 11, 2007 | Previous weeks
Overview: Thursday, October 11, 2007 (next release 2:00
p.m. on October 18, 2007)
Since Wednesday, October 3, natural gas spot prices decreased
at most markets in the Lower 48 States outside the Midcontinent region. Prices at the Henry Hub fell 17 cents per MMBtu,
or 2 percent, since Wednesday to $6.79 per MMBtu. At the NYMEX, the futures contract for November
delivery at the Henry Hub settled yesterday (October 10) at $7.01 per MMBtu, falling
27 cents or 4 percent since last Wednesday, October 3.Natural gas in storage was 3,336 Bcf as of October
5, which is 7.6 percent above the 5-year average (2002-2006). The spot price for West Texas Intermediate
(WTI) crude oil increased $1.33 per barrel on the week (Wednesday-Wednesday) to
$81.30 per barrel or $14.02 per MMBtu.
Natural gas spot prices decreased since last Wednesday,
October 3, at most market locations outside the Midcontinent region with
declines of up to 36 cents per MMBtu. Moderate temperatures, ample supplies of
natural gas in storage, and the imminent end of the 2007 hurricane season
likely contributed to the declines. However, industrial demand for natural gas, lingering injection demand
for natural gas, and incipient heating demand for natural gas in the upper
Midwest provided some support for prices, preventing larger declines. Average price declines for regions outside
the Rocky Mountain region ranged between 8 and 27 cents per MMBtu, or 1 and 3
percent, since last Wednesday, October 3. In the markets along the Gulf of Mexico, price decreases for the week averaged
between 17 and 27 cents per MMBtu, with the Alabama and Mississippi regions
posting the largest declines in the Lower 48 States. In the Northeast region, moderating
temperatures contributed to price decreases averaging 26 cents per MMBtu. Prices in the Rocky Mountain region posted by
far the largest average decrease on a regional basis, falling about $1.07 per
MMBtu, with some individual markets in the region posting declines of as much
as $2.02 per MMBtu. Continuing
transportation constraints in the Rocky Mountain region account for the unusual
pricing patterns in the region. In
contrast to the overall pattern of declining prices throughout the Lower 48 States,
the Midcontinent region posted the only average regional increase since last
Wednesday, October 3, as autumnal temperatures moved into region and resulted
in heating demand for natural gas.
At the NYMEX, prices for the futures contracts for delivery
in each of the next 12 months decreased, with the 12-month futures strip (November
2007 through October 2008) falling about 13 cents per MMBtu, or about 1 percent,
since last Wednesday, October 3. The futures contract for November delivery settled
yesterday (October 10) at $7.01 per MMBtu, declining 27 cents per MMBtu, or 14 percent,
since last Wednesday, October 3. The
prices of the NYMEX futures contract for delivery at the Henry Hub during the
months of the upcoming 2007-2008 heating season (November 2007 through March
2008) decreased by 19 cents per MMBtu, or 2 percent, on average, since last
Wednesday. Overall, the 12-month futures
strip (November 2007 through October 2008) traded at a premium of about 98
cents per MMBtu relative to the Henry Hub spot price, averaging $7.77 per MMBtu
as of Wednesday, October 10.
Recent
Natural Gas Market Data
Working gas in storage totaled 3,336 Bcf as of Friday, October 5, which is 7.6 percent above the
5-year average inventory level for the report week, according to EIA's Weekly Natural Gas Storage Report (see
Storage Figure). Stocks
were 44 Bcf below the 3,380 Bcf in storage at this
time last year, but exceeded the 5-year average by 237 Bcf.With more than 3 weeks remaining in the
current refill season, net additions to storage need average only 32 Bcf per
week to exceed the 3,452 Bcf that was in storage at the beginning of the past
winter. On the week, net injections into
working gas storage totaled 73 Bcf, exceeding both the 5-year average injection
and last year's net injection of 63 Bcf for the same report week. Temperatures in the Lower 48 States were
moderate and somewhat warmer than normal (see
Temperature Maps). These moderate temperatures limited
natural gas demand, thereby contributing to larger net injections of natural
gas into storage.
Other Market Trends:
EIA Releases Winter Natural
Gas Outlook:
In its latest Short-Term
Energy Outlook (STEO), released October 9, the Energy
Information Administration (EIA) projects that this winter the average
household using natural gas as a heating fuel can expect to pay 10 percent more
than last winter with an expected 6-percent increase in price and a 3-percent
increase in consumption. Average winter-season weather in the lower 48 States
is projected to be 4 percent colder this winter compared with last winter and 2
percent warmer than the 30-year average (1971 to 2000). The annual Henry Hub spot price is expected
to average about $7.21 per Mcf in 2007 and $7.86 per Mcf in 2008.Monthly, however the Henry Hub can vary
significantly from those averages. The
spot price averaged $6.26 per Mcf in September, which was the fourth
consecutive decline in the monthly average spot price since May 2007. The decline in the monthly Henry Hub spot
price is attributable to a lack of hurricane activity in the Gulf of Mexico
this year and historically high storage inventories. Prices are expected to
recover as winter approaches and hit a seasonal peak of $8.65 per Mcf in
January 2008. Working gas inventories by
the beginning of the heating season are projected to exceed 3.4 trillion cubic
feet, slightly below the all-time high achieved in 1990. Total natural gas consumption is expected to
increase by 4.6 percent in 2007 and 0.4 percent in 2008. The 2007 total dry
natural gas production is expected to increase by 1.3 percent in 2007 and by
0.9 in 2008. Total Federal Gulf of
Mexico production is expected to decline by 2.6 percent in 2007 but increase by
5.4 percent in 2008 reflecting the contribution from developing deepwater
supply infrastructure.Liquefied natural
gas (LNG) imports are expected to increase to 840 Bcf in 2007 and 1,010 Bcf in
2008.
Natural
Gas Transportation Update: