government gas comment for this past week some interesting stuff on the west coast draw. Prices surged to $19.50 in Calif. briefly.
wngm@tonto.eia.doe.gov (Weekly Natural Gas Market Update)
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To view the Weekly Market Update with graphs, go to eia.doe.gov.
Frigid temperatures over the weekend of November 18-19 and
into last week sent cash prices soaring by 50 cents to $1.00 or
more on Monday to well over $6.00 per MMBtu at most market
locations, followed by lesser gains on Tuesday. In the four
cities monitored for this report (see Temperature graph and
table), composite daily average temperatures were below
normal every day of the week, and by double-digit margins
most days. In California, prices spiked as high as $19.50 per
MMBtu on Tuesday. On Wednesday, the final trading day of
this holiday-shortened week, weather forecasts for near-term
relief from the cold in some areas and the anticipation of
slackening industrial demand from holiday operating schedules
led to price declines in the range of 5 to 50 cents per MMBtu in
most locations and even larger drops at some Western points.
At the Henry Hub, cash prices jumped 60 cents on Monday,
gained 11 more cents on Tuesday, then dropped 3 cents on
Wednesday to end the week at $6.32 per MMBtu. The
NYMEX futures contract for December delivery gained around
15-17 cents each day, ending Wednesday's short trading session
at $6.577 per MMBtu, another near-term-contract settlement-
price record high. The spot price of West Texas Intermediate
crude oil held at $36.00 per barrel or higher, ending trading on
Wednesday at $36.15 per barrel, or $6.23 per MMBtu.
Storage: The American Gas Association's (AGA) storage
withdrawal estimate of 94 Bcf for the week ended Friday,
November 17 is the largest for this particular week for the 7
years covered by AGA's reports, and is double the average
estimate of 46 Bcf for this week in the previous 6 years. The
estimated 94 Bcf withdrawal occurred when temperatures were
lower than normal in many gas-consuming areas of the country,
in some cases sharply so. While the AGA report showed
significant withdrawals in all three regions, the withdrawal of
31 Bcf in the West Region was particularly large, being 10
percent of the regional working gas in storage. It is the third
largest ever for that region by AGA's estimates, and is all the
more notable for its occurrence this early in the heating season.
The West Region's deficit from its EIA-estimated 5-year
average for this point in the year widened by nearly 10
percentage points, to 27.3 percent. By EIA estimates, the West
Region's stocks were at their lowest levels for this point in the
heating season for at least the last 5 years. On the other hand,
with withdrawals of 39 Bcf, the East Region's deficit increased
only slightly, standing at 1.6 percent as of November 17. EIA
estimates that total U.S. stocks stood at 2,658 Bcf, 8.1 percent
below the 5-year average for this point in the year.
Spot Prices: Although prices rose sharply throughout the
nation on Monday, most attention was focused on California
and other Western points, as prices there that had been
approaching $10.00 per MMBtu by the end of the previous
week were now spiking well into the teens and approaching
$20. In the midst of unseasonable sub-freezing temperatures,
many markets across the Lower 48 were also saddled with
operational flow orders or similar restrictions that put upward
pressure on prices. In addition, California had to deal with a
continuing shortfall in electric generating capacity from
sidelined nuclear plants a shortfall that had to be made up
almost exclusively by gas-fired generation because of the lack
of available hydroelectric power. Two major nuclear plants that
were being powered up after scheduled outages tripped offline
on Monday, causing the CA Independent System Operator to
declare a Stage One Electrical Emergency. Prices on SOCAL
peaked on Tuesday at $17.35 per MMBtu. But prices began to
soften on Wednesday, falling to $16.67 and $15.86 on SOCAL
and at the PG&E citygate, respectively, as the two downed
plants were successfully ramping up capacity. Meanwhile,
prices that had climbed to as much as $7.52 per MMBtu in the
Northeast on Tuesday retreated to around $6.55-$6.80 on
Wednesday.
Futures Prices: The December NYMEX futures contract
recorded significant gains each day last week, with
Wednesday's uptick, at $0.169 per MMBtu, the largest of the
week despite that day's lagging spot prices and forecasts for
warmer weekend temperatures and slackening holiday-weekend
demand. The near-month contract ended the week at a new all-
time settlement-price high of $6.577 per MMBtu, and prompted
some to ponder what might have been had Wednesday not been
a short trading day. The NYMEX had already closed and most
spot-gas trading had been completed before Wednesday's
release of the AGA's net withdrawal estimate of a whopping 94
Bcf. The December contract, which closes tomorrow (Tuesday,
November 28), opened trading today at $6.375 per MMBtu.
While the latest National Weather Service 6 to 10 day forecast
(calling for warmer-than-normal temperatures in southern
California and parts of Nevada and Arizona) may bring some
relief for California spot prices, the forecast for below-normal
temperatures for nearly the entire eastern half of the country for
later next week indicate upward price pressures are likely to
continue for the near future.
Summary: Spot prices surged as unseasonably cold
temperatures prevailed throughout most of the country, then
sagged slightly at the end of this holiday-shortened week. Short
supply and spiking prices continued to plague California.
Futures prices moved steadily upward to new record highs. |
