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EIA Natural Gas Market Summary - 3/19/2004


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Natural gas spot prices increased since Wednesday, March 10, at most market locations in the Lower 48 States. For the week, prices at the Henry Hub increased 28 cents or about 5 percent to $5.61 per MMBtu. On March 17, the price of the NYMEX futures contract for April delivery at the Henry Hub settled at $5.722 per MMBtu, increasing roughly 33 cents or 6 percent since the previous Wednesday. Natural gas in storage decreased to 1097 Bcf as of March 12, which is less than 6 percent below the 5-year average. The spot price for West Texas Intermediate (WTI) crude oil climbed $2.00 per barrel or about 6 percent since last Wednesday, to $38.21 per barrel or $6.588 per MMBtu.

Spot gas prices increased 2 to 8 percent since March 10, climbing between 11 and 46 cents per MMBtu, with increases exceeding 25 cents at most market locations. Factors contributing to the run-up in natural gas prices include wintry weather conditions blanketing most of the Northeast and Midwest regions and climbing crude oil prices, which increased $2 per barrel or 35 cents per MMBtu since Monday, March 15. The largest increases occurred principally in the intensive gas-consuming regions of the Northeast and Midwest. Some markets in Texas, Louisiana and California also had increases of more than 32 cents per MMBtu, despite relatively mild weather conditions in their respective regions. With these price hikes, prices at most market locations now exceed last year’s level by between 2 and 7 percent. For example, as of Wednesday, March 17, prices at the Henry Hub exceeded last year’s level by about 5 percent. Despite last week’s increases, prices remain well below the highs recorded in mid-January 2004, and have fallen roughly 5 to 10 percent at most market locations since the start of the new year.

At the NYMEX, the price of the futures contract for April delivery at the Henry Hub increased about 33 cents or 6 percent since March 10. Similarly, the price of the futures contracts for delivery through the refill season months (April-October) also increased between 28 and 33 cents per MMBtu or between 5 and 6 percent. At $5.722 per MMBtu, the price of the April contract is at its highest level since January 12, 2004, and the highest level for a near-month contract since January 28, 2004.

Working gas in storage was 1097 Bcf as of Friday, March 12, 2004, according to the EIA Weekly Natural Gas Storage Report. This is about 6 percent below the 5-year average for the report week and 461 Bcf above the level last year for the same week.The implied net withdrawal during the report week was 46 Bcf, which is 43 percent below than the 5-year average withdrawal of 81 Bcf for the week, and about 44 percent less than the withdrawal of 82 Bcf reported for the same week last year. Warmer-than-normal temperatures across most of the Lower 48 States outside of the East North Central Census Region likely contributed to the smaller-than-normal withdrawals of natural gas from storage.

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