Government gas commentary:
Last quote was" stock withdrawals in January are estimated to 15 percent below average"
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EIA, the Nation's clearinghouse for energy statistics. xxxxxxxxxx
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To view the Weekly Market Update with graphs, go to eia.doe.gov.
Because of the Federal holiday on Monday, February 19, 2001, the
next issue of the Weekly Market Update will be published on Tuesday,
February 20th.
Spot prices at the Henry Hub began last week $0.75 below the
previous week's high, which occurred Friday at $6.51 per
MMBtu. Prices continued to trend down through midweek
before bouncing up on Thursday only to decline again at the end
of the week (see Price Graph). The futures market followed a
somewhat similar pattern as it reached its weekly high for the
March contract of $6.235 per MMBtu on Wednesday. The price
of West Texas Intermediate crude oil stayed above $31.00 per
barrel most days and ended the week at $31.05 or about $5.35
per MMBtu. The unusually cold temperatures in November and
December and high natural gas prices in upstream markets
resulted in higher prices to consumers. According to the latest
Bureau of Labor Statistics (BLS) data for December, the
seasonally adjusted price index for natural gas delivered to
residential consumers increased sharply compared to December
of last year. The BLS reports that prices increased by 43 percent
nationally with several cities (Chicago, Los Angeles, and San
Francisco) recording price index hikes of over 70 percent. Most
areas in the Northeast had increases of between 20 and 30
percent while the index for Philadelphia increased by only 14.2
percent. An exception to these record price climbs occurred in
Detroit where prices declined 0.4 percent; a 3- year cap on
prices to residential consumers in Michigan is still in effect (it
expires at the end of March 2001).
Storage: During the week ending February 2, 2001, 105 Bcf was
withdrawn from underground storage facilities according to the
most recent estimate from the American Gas Association (AGA).
The latest week's estimate brings average daily net withdrawals for
January to 16.6 Bcf per day almost 3 Bcf or 15 percent below
EIA's 5-year January average of 19.5 per day. The relatively low
withdrawals for most of January reflect the moderate temperatures
for the month (NWS has reported that January was 4 percent
warmer than normal). Nearly two-thirds (66 Bcf) of the stock
withdrawals occurred in the East with the remainder fairly evenly
divided between the Producing and West regions, with respective
net drawdowns of 19 and 20 Bcf. Stock withdrawals in the West
continued at a relatively brisk pace, with the removal of 12.5
percent of stocks remaining at the beginning of the period
compared to net draws of 7.5 percent and 6.6 percent from
inventories in the East and Producing regions.
Spot Prices: Prices at the Henry Hub and at most other major
markets reached their lowest level of the year last week. Prices at
the Henry Hub traded on Wednesday at $5.67 per MMBtu, which
is 45 percent less than this year's high of $10.34 on January 8.
Prices at most markets moved up at the end of the week based
partially on weather forecasts calling for a return of arctic air to
some parts of the Midwest. Spot prices on Friday ranged from a
low of $6.08 at the Henry Hub to a high of $6.25 in the Rocky
Mountains. Citygate prices in California, though still quite high,
moved down most days reaching $12.94 on Thursday but bounced
back on Friday to $14.83 per MMBtu. In spite of low temperatures
in the Midwest, citygate prices in Chicago moved down on Friday
to $6.35 per MMBtu-down $0.23 for the day.
Futures Prices: After trading well below $6.00 per MMBtu during
the first 2 days of the week, the NYMEX futures contract for
March delivery settled at $6.210 on Friday. Even at the higher
price level, the near-month contract remains below the final price
for the February contract ($6.293) and more than $3.75 per
MMBtu lower than January's $9.978. The April contract also
moved up but remained below $6.00 at $5.938.
Summary: The BLS reported that residential customers saw their
gas bills increase by an average of 43 percent in December 2000
compared to year earlier levels. Prices softened at most spot
market locations and traded near $5.65 at midweek before climbing
back over $6.00 at week's end. The March futures contract settled
up for the week but remains 38 percent below the January contract
price. Stock withdrawals in January are estimated to have been 15
percent below average. |
