Natural Gas Weekly Update Thursday, September 6, 2007
Overview: Thursday, September 6, 2007 (next release 2:00 p.m. on September 13, 2007)
Since Wednesday, August 29, natural gas spot prices increased at most market locations in the Lower 48 States, with a few exceptions in Florida and the Rocky Mountain region. For the week (Wednesday-Wednesday), prices at the Henry Hub rose 17 cents, or about 3 percent, to $5.81 per MMBtu. Yesterday (September 5), the price of the NYMEX futures contract for October delivery at the Henry Hub settled at $5.805 per MMBtu, increasing roughly 22 cents or about 4 percent since last Wednesday (August 29). Natural gas in storage was 3,005 Bcf as of August 30, leaving natural gas inventories at 10.4 percent above the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil increased in all but one trading session during the week, rising $2.22 per barrel, or 3 percent, on the week to $75.74 per barrel or $13.06 per MMBtu.
Despite seasonally moderate temperatures in all areas, with the exception of California and the desert Southwest, and favorable supply, natural gas spot prices rose at virtually all market locations this week. The holiday-shortened week and the resulting decrease in industrial demand did not provide significant downward pressure on prices. While spot prices at most locations decreased in the first 3 trading days of the report week, yesterday�s increases in prices, most of which ranged between 20 and 60 cents per MMBtu, were sufficient to offset beginning-of-the-week declines, resulting in net gains since last Wednesday. The weekly price decreases were limited to Florida and a few pricing points in the Rocky Mountains, with the decreases ranging between 19 cents and $1.08 per MMBtu. Yesterday, the Rocky Mountain regional price averaged $2.72 per MMBtu, with a minimum of $0.66 (Northwest South of Green River) and a maximum of $5.32 (Stanfield). In all, five trading locations recorded prices below $1 per MMBtu in the Rockies. Elsewhere in the Lower 48, prices for the week increased between 2 and 34 cents per MMBtu. The Henry Hub spot price rose 17 cents to $5.81 per MMBtu, matching the average price increase for the other trading locations in Louisiana. In the producing areas along the Gulf coast outside Louisiana, prices increased by an average of 24 cents per MMBtu. As of yesterday, only 12 trading locations registered prices higher than $6 per MMBtu, however, yesterday�s prices are on average about 7 percent above spot prices last year at this time, not including the Rocky Mountain region prices. Regardless of this week�s price increases, market behavior has differed in reaction to falling prices in recent weeks. For example, while Chesapeake Energy Corp. announced curtailment of about 125 million cubic feet (MMcf) per day of production from its fields in the Anadarko Basin and across Texas because it considers current natural gas prices inadequate, Williams Company and Anadarko Petroleum Company have announced that they view the current natural gas price levels as temporary and thus will not reduce their production.