Overview: Thursday, September 20, 2007 (next release 2:00 p.m. on September 27, 2007)
Natural gas spot price movements were mixed this week (Wednesday to Wednesday, September 12-19), as a variety of factors resulted in price increases at more than half of the trading locations in the Lower 48 States. At the same time, the presence of Tropical Storm Ingrid and the possibility of Tropical Disturbance Number 50 turning into Tropical Storm Jerry did little to boost natural gas futures prices this week. The price of the New York Mercantile Exchange (NYMEX) futures contract for October delivery settled at $6.180 per MMBtu yesterday (September 19), which is 26 cents, or about 4 percent, less than last Wednesday�s price. As of Friday, September 14, 2007, natural gas in storage was 3,132 Bcf or 8.2 percent above the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil continued climbing, increasing $2.14 per barrel this week to $81.99 per barrel or $14.14 per MMBtu yesterday. Crude oil prices marked a record price for the third consecutive day, after the Energy Information Administration (EIA) reported that the crude oil stockpiles had declined by 3.8 million barrels on the week and the Federal Reserve reduced interest rates by half a percent.
Moderate weather in parts of the country, increased cooling load in the West this week, as well as a variety of market influences, including record-high crude oil prices and abundant natural gas volume in storage, led to mixed spot price movements in the Lower 48 States. Spot market activity since last Wednesday included price decreases in the Midcontinent region, as well as in Alabama/Mississippi, Florida, and California. The Henry Hub spot price, however, increased on the week, averaging $6.24 per MMBtu yesterday, 11 cents higher than last Wednesday. Prices at most of the other trading locations in Louisiana also increased, recording a regional average of $6.12 per MMBtu, 5 cents higher than 1 week ago. Despite temperatures that would have limited the cooling load for much of this week in the Northeast, average spot prices in this region increased by 4 cents. While prices at three trading locations in the Northeast decreased on the week, at the remaining points, including Transcontinental Pipeline�s New York location, prices increased between 2 and 17 cents. In the Rockies, an outage resulting from an equipment fire in the Cheyenne Plains compressor station located in Weld County, Colorado, completely cut off deliveries to Cheyenne Plains Gas Pipeline from Wyoming Interstate Company and Colorado Interstate Company. With already low prices in the Rockies, the additional restriction led spot prices even lower, with the Cheyenne Hub recording an average price of 3-cents per MMBtu price on Monday, September 17. Flow of gas has resumed since then, and the price at the Hub was $1.23 per MMBtu yesterday.
In contrast to last week�s significant increases, the price of the futures contract for October delivery at the Henry Hub decreased 25.8 cents, or about 4 percent, to $6.180 per MMBtu since last Wednesday, September 12. Similarly, all of the remaining contracts in the 12-month strip decreased on the week, with decreases averaging 28 cents per MMBtu or 3.5 percent. The average settlement price for the 12-month strip was $7.483 per MMBtu yesterday. The potential disruption from tropical storms in the Gulf of Mexico, as well as evacuation of non-essential personnel from offshore platforms by BP, Chevron, and Shell early this calendar week, proved to have little impact on the futures contracts prices. The October and November futures contracts recorded decreases in three trading sessions this week, which were sufficient to
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