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Natural Gas Weekly Update Archive

for week ending January 27, 2010  |  Release date:  January 28, 2010   |  Previous weeks

Released: January 28, 2010 at 2:00 P.M.
Next Release: Thursday, February 4, 2010
Overview (For the Week Ending Wednesday, January 27, 2010)

  • Natural gas prices at the Henry Hub fell from $5.54 per million Btu (MMBtu) on Wednesday, January 20 to $5.42 per MMBtu on Wednesday, January 27, a decline of 12 cents or 2 percent.
  • At the New York Mercantile Exchange, (NYMEX), the price of the February 2010 natural gas contract fell 22 cents, or 4 percent, over the week, closing at $5.274 per MMBtu.
  • The price of West Texas Intermediate (WTI) crude oil ended the week at $73.64 per barrel, or $12.70 per MMBtu, a decline of $3.78 per barrel from the previous week.
  • Working gas in storage decreased to 2,521 billion cubic feet (Bcf) as of Friday, January 22, according to EIA’s Weekly Natural Gas Storage Report. The implied net withdrawal for the week was 86 Bcf.
  • The natural gas rotary rig count, as Baker Hughes Incorporated reported, increased by 22 to 833 as of January 22.

NYMEX Natural Gas Futures Near-Month Contract Settlement Price, West Texas Intermediate Crude Oil Spot Price, and Henry Hub Natural Gas Spot Price Graph

More Summary Data

Natural gas prices fell at most market locations, with the exception of most locations in the Midcontinent and Rocky Mountains. At most market locations, prices hit their high for the week on Monday, January 25, likely the result of colder weather during the report week. Frigid temperatures also likely led to a jump in natural gas demand on Tuesday, according to Bentek Energy LLC. However, after spiking on Monday and Tuesday, most prices fell below levels recorded on January 20. The price at the Henry Hub rose as high as $5.76 per MMBtu on Monday, before falling to a closing price of $5.42 per MMBtu on Wednesday. Price declines over the week were moderate, ranging from 1 cent to 16 cents. Prices across the country on Wednesday ranged between $5.24 per MMBtu at the Texas Eastern South Texas trading point and $6.15 per MMBtu at the Iroquois Zone 2 trading point in the Northeast.

Price increases occurred most notably in the Rockies and Midcontinent, as well as at some locations in the Northeast and Midwest. Temperatures in the Upper Midwest averaged around zero degrees in some places, likely putting pressure on prices at trading points in the Midwest. Although prices varied during the week in the Rockies and Midcontinent, net weekly price increases from Wednesday to Wednesday were moderate, ranging between 1 cent and 20 cents.

At most trading points, prices are higher than year-ago levels. The Henry Hub price is 14 percent higher than its level of $4.75 on January 27, 2009. Year-over-year price differences are most pronounced at trading points in the Rocky Mountains and Midcontinent, where many locations’ prices are more than $1 higher than year-ago levels.

Spot Prices

At the NYMEX, the February 2010 contract ended trading on Wednesday at $5.274 per MMBtu. Yesterday was the February contract’s expiration date, or last day of trading. Wednesday’s closing price dropped about 22 cents from the previous Wednesday’s price of $5.496 per MMBtu. This price was the lowest during its tenure as the near-month contract. Since becoming the near-month on December 30, the February contract fell about 44 cents overall. In the last 2 days of trading, the contract’s price fell about 45 cents, falling about 8 percent from Monday. During the week, the 12-month strip (the average of the 12 contracts from February 2010 to January 2011) dropped by about 22 cents, from $5.82 per MMBtu to $5.60 per MMBtu.

Wellhead Prices Annual Energy Review
More Price Data

Working gas in storage decreased to 2,521 Bcf as of Friday, January 22, according to EIA’s Weekly Natural Gas Storage Report Weekly Natural Gas Storage Report (WNGSR) (see Storage Figure). The implied net withdrawal of 86 Bcf was about 50 percent lower than last year’s net withdrawal of 184 Bcf and the 5-year average (2005-2009) of 179 Bcf for the report week. Warmer-than-normal temperatures likely contributed to the below-normal rate of withdrawals during the report week. Working gas inventories are 120 Bcf higher than year-ago levels and 6 Bcf above the 5-year average. During the week ending January 15, working gas in storage fell below the 5-year average for the first time since February 6, 2009. However, natural gas stocks once again exceed 5-year average levels by significant margins for this time of year, although inventories in the East Region remain slightly below the 5-year average.

Temperatures were generally warmer than normal in most Census Divisions in the lower 48 States during the week ended January 21, 2010. Based on the National Weather Service’s degree-day data, temperatures in the lower 48 States during the week were significantly warmer than both normal and year-ago levels throughout the lower 48 States (see Temperature Maps and Data). On average, heating degree-days were 20 percent below normal and 31 percent below last year’s level. Each of the nine Census Divisions in the lower 48 States reported heating degree-days falling between 4 and 42 percent below normal, suggesting weaker-than-normal heating demand for natural gas. In the East South Central and West South Central Census Divisions, heating degree-days were 32 and 41 percent below normal, respectively. In the Pacific and Mountain Census Divisions heating degree-days were 4 percent and 14 percent below normal, respectively. On average, heating degree-days were 20 percent below normal and 31 percent below last year’s level in the lower 48 States.

Storage Table

More Storage Data
Other Market Trends

Natural Gas Rotary Rig Count Rises to 833. The natural gas rotary rig count was 833 as of January 22, an increase of 22 rigs from the previous week, according to data Baker Hughes Incorporated released. This week marked the third consecutive double-digit increase. In the past 3 weeks, rigs have risen by a total of 74. Rigs now are 30 percent below their level at this time in 2009. In the past, the natural gas rig count has lagged the Henry Hub weekly price by several weeks or more, but this relationship has been less apparent in recent months (see figure below). Horizontal rigs (including both oil and natural gas) also have shown relatively strong increases in the last 3 weeks, increasing by 16 to 627 as of January 22. At 627, horizontal rigs are at their highest count since November 21, 2008, and are close to their maximum of 650, reached on October 31, 2008. Horizontal rigs have displayed a mostly increasing pattern over the last several months. Although vertical rigs (also including both oil and natural gas) have also generally risen, their numbers have oscillated. Compared with 1 year ago, horizontal rigs are 12 percent higher, while vertical rigs are 34 percent lower.


FERC Clarifies Rule on Posting by Intrastate Natural Gas Pipelines.The Federal Energy Regulatory Commission (FERC) on January 21 revised its regulations requiring major intrastrate pipelines to post daily scheduled volume information and other data for certain points. The rule requires intrastate pipelines that transport more than 50 million MMBtu per year to post operational data for all receipt or delivery points with design capacity of more than 15,000 MMBtu per day. The order allows for modifications that the commission said will substantially reduce the number of intrastate pipelines that must comply with the new regulations. The new regulations were first proposed in December 2007 and in November 2008 FERC issued Order 720, which included the new regulations. The modifications are available here: http://www.ferc.gov/whats-new/comm-meet/2010/012110/G-1.pdf.

EIA to Change URLs of Key Data Releases. On February 22, 2010, EIA will change the web addresses for information in the Weekly Natural Gas Storage Report (WNGSR) and the Weekly Petroleum Status Report (WPSR). For WPSR, which is released in two parts, the change affects only the morning part of the release, which is the initial release of market-sensitive information. The new URLs will be accessible from EIA’s website. The new web address for the WNGSR will be http://ir.eia.gov/ngs/ngs.html. The new URLs can be tested on February 8 and 12. For more details and a schedule for upcoming tests see: http://www.eia.doe.gov/oil_gas/irnotice.html.

Natural Gas Transportation Update

  • Sea Robin Pipeline is performing pigging on its 24-inch diameter Line 706 between Eugene Island 205 and South Marsh Island 33 in offshore Louisiana starting today, January 28. The pipeline expects the pigging to be complete by February 2, after which the segment will be shut in for repairs for about 4 days. Pigging refers to the practice of engaging pipeline inspection gauges in order to inspect and clean pipelines without interrupting the flow of natural gas in the line.
  • Rockies Express Pipeline (REX) announced that the force majeure declared November 14 on its system east of the Chandlersville compressor station remains in effect. However, additional investigation, pipe fitting, and replacement work at isolated locations is nearing completion. REX reported that Segment 390, which spans from Chandlersville to Clarington, Ohio, partially returned to service on Wednesday, January 27. REX has finalized a return-to-service plan with the Federal Pipeline and Hazardous Materials Safety Administration (PHMSA). According to the plan, service on Segment 390 will initially be limited to about 88 percent of the segment’s contracted capacity prior to the force majeure. This capacity limitation is expected to remain in effect for less than 2 weeks. As of yesterday, limited delivery capacity was available at the Tennessee, Dominion, Texas Eastern, and East Ohio interconnects.
  • In an update Thursday on the force majeure declared December 17 at its Totem storage field, Colorado Interstate Gas Pipeline (CIG) reported that it anticipates repair work to be complete around February 12, based on progress thus far. CIG initially expected the repairs to be complete on February 28.
  • Northern Natural Gas Pipeline declared a system overrun limitation for gas day January 28 north of the Northern Natural Gas Demarcation point in Kansas because of forecasts for low temperatures in the market area. The pipeline also declared a force majeure at its Palmyra compressor station in Nebraska as a result of mechanical issues on one of its units. The pipeline expects the force majeure to last several days and reduce capacity through Palmyra by 120,000 MMBtu per day, affecting both the Palmyra North and Oakland groups downstream of the constraint point.

See Weekly Natural Gas Storage Report for additional Natural Gas Storage Data.
See Natural Gas Analysis for additional Natural Gas Reports and Articles.
See Short-Term Energy Outlook for additional Natural Gas Prices, Supply, and Demand.