for week ending July 18, 2008 | Release date: July 17, 2008 | Previous weeks
Released: July 17, 2008
Next Release: July 24, 2008
Overview |
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More Summary Data |
Prices |
Despite the relatively hot temperatures that blanketed much of the Lower 48 States, natural gas spot prices continued to decline this report week, registering price drops at virtually all market locations. The largest weekly regional decreases were recorded in Arizona/Nevada, where prices declined 97 cents or 8.5 percent per MMBtu, followed by California ($0.82 per MMBtu), and Louisiana ($0.81 per MMBtu). Prices in other locations in the producing areas of the Gulf of Mexico also fell on the week, with average prices yesterday in Alabama/Mississippi 79 cents lower than the previous Wednesday. In the Midwest, prices decreased despite above-normal temperatures. Continued restrictions at ANR’s Sandwich (Illinois) and St. John’s (Indiana) compressor stations and disruption of transportation services in those areas contributed to the 78-cent decrease at the ANR Mainline 7 trading location, where natural gas flows through the two compressor stations. However, high temperatures and increased space-cooling demand seemed to affect prices in the eastern half of the United States, resulting in increases at a few points in the Northeast, most notably Transco Zone 6 New York, which increased 38 cents to $13.39 per MMBtu. |
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At the NYMEX, the price of the August 2008 contract decreased $0.608 per MMBtu on the week, settling yesterday at $11.398, reaching the lowest price for a near-month contract since May 20, when the June futures contract settled at $11.365 per MMBtu. Similarly, other contracts in the 12-month strip also decreased on the week, with the largest decreases occurring for delivery during the 2008-2009 heating season. The average price for the heating season contracts decreased 69 cents per MMBtu on the week to $12.210. With only 16 weeks left in the injection season and current inventories that are both below last year’s and the 5-year average level, the more than $1 per MMBtu premium provides a significant incentive for suppliers to inject natural gas into storage. |
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More Price Data |
Storage |
Working gas in storage totaled 2,312 Bcf as of Friday, July 11, which is 2.1 percent below the 5-year average inventory level for the report week, according to EIA’s Weekly Natural Gas Storage ReportWeekly Natural Gas Storage Report (see Storage Figure). As of July 11, stocks were 361 Bcf below the 2,673 Bcf in storage at this time last year, and were also below the 5-year average by 49 Bcf. Net injections into working gas storage totaled 104 Bcf, which were about 37 percent higher than last year’s net injection of 76 Bcf and 25 percent higher than the 5-year average net injection of 83 Bcf. This week’s net injection marks the second highest net injection of the season, second only to the 105-Bcf injection for the report week ended May 30. Furthermore, it is the first time in 5 weeks that the current net injection exceeded the 5-year average. |
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More Storage Data |
Other Market Trends |
President Bush Lifts the OCS Drilling Moratorium. On July 14, 2008, President George W. Bush lifted the Outer Continental Shelf (OCS) drilling ban that had been in place since 1990, when then President George H.W. Bush issued a Presidential Directive that enacted a blanket moratorium until 2000 on all unleased areas offshore Northern and Central California, Southern California except for 87 tracts, Washington, Oregon, the North Atlantic coast, and the Eastern Gulf of Mexico coast. Separate from the annual moratoria in appropriations legislation, this directive meant that no leasing or pre-leasing activities were allowed to occur in these areas during the entire period. In 1998 President Clinton extended the moratorium through 2012. Prior to 1990, the first OCS moratorium was enacted as part of the fiscal year 1982 Interior Appropriations Bill. It covered 736,000 acres off the coast of California. From 1982 to 1992, Congress supported annual moratoria on six other areas through the Interior Appropriations Bill. Other annual moratoria, which only covered the year in which they were passed, followed between 1983 and 1990. The lifting of the drilling ban by the President, however, does not completely remove restrictions on drilling in the areas of the OCS. The United States Congress would also have to lift its 27-year ban to allow for exploration and production off the east and west coasts, as well as in the restricted areas of the Gulf of Mexico. According to the latest Minerals Management Services’ (MMS) estimates, currently unavailable areas of the Lower 48 States OCS hold 76.47 trillion cubic feet (Tcf) of natural gas and 17.84 billion barrels (bbl) of crude oil in undiscovered technically recoverable resources. Most of the natural gas is estimated to be off the Atlantic coast, where nearly 37 Tcf is believed to be situated. This compares with estimated currently available OCS resources in the Gulf of Mexico that total 209.8 Tcf of natural gas and 40.9 billion bbl of crude oil, according to MMS. In 2006, the Federal OCS produced 2.9 Tcf of natural gas, while natural gas reserves equaled 14.55 Tcf, according to MMS. For more information on legislation and regulations on offshore energy development, see the EIA report, Overview of U.S. Legislation and Regulation Affecting Offshore Natural Gas and Oil Activity. |
Natural Gas Transportation Update |
See Weekly Natural Gas Storage Report for additional Natural Gas Storage Data. |