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Natural Gas Prices for February Bidweek Plummet, NGI Reports

Posted on: Thursday, 2 February 2006, 12:00 CST

With almost no heating load in January or forecast for the first week of this month, natural gas price indexes for February dropped an average of $2.53/MMBtu or 25% from January levels across the country. The February national spot gas average registered $7.66/MMBtu, compared to $10.19 the previous month, according to the Natural Gas Intelligence (NGI) monthly Bidweek Survey.

The February price for Transco Zone 6-New York City was one of the biggest losers, dropping $5.45/MMBtu to average $9.77. The price drops at NGI's other 90-plus pricing locations, were in no case less than a dollar, and generally from $2-$3-plus.

At $8.47, the benchmark Henry Hub fell $2.96/MMBtu from the its January Bidweek posting. Other key points also plummeted; the Houston Ship Channel fell $1.46/MMBtu to $7.22 and in the Midcontinent Panhandle Eastern fell $2.01 to $6.77/MMBtu. The Chicago citygate fell $2.73/MMBtu to average less than $8.00. California price drops were generally in the low $2.00s with the regional average coming in at $7.12/MMBtu.

In recognizing the growing weakness of weather and storage fundamentals as January went on, the screen once again served as a harbinger of the fact that major index plunges were in the offing. The February futures contract went off the board last week at a nice round $8.400 following an expiration-day gain of 17.1 cents. That was a little more than $3 below the January settlement of $11.431.

The $10+ quotes that cropped up in January virtually disappeared this month.

Illustrating how an abundance of storage greatly weakened the February market, a utility buyer in the South commented, "We have our storage (withdrawals) charted each year, and this is probably the most we've had (in storage) at this point in years." The situation had reached the point that his company planned to sell a package of indexed baseload gas coming under a winter term deal for February so it will be able to use more storage during the month. The sale would be at the same index, he said, so it will come out as a wash on any potential profit or loss.

The price trend was continuing down in daily quotes this week despite predicted normal cold weather for the second week of February. "However, with bearish storage statistics still expected at least through the 9th of February, we are viewing the shift toward colder patterns as a classic 'too little, too late,'" Jim Ritterbusch of Ritterbusch and Associates was quoted as saying in NGI's Daily Gas Price Index.

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About Intelligence Press Inc.

Intelligence Press Inc. is an independent publishing company and has been serving the energy industry since 1981 with leading news and price survey reports for the natural gas market in its publications: Natural Gas Intelligence, Daily Gas Price Index, Weekly Gas Price Index and Power Market Today.

The publisher runs real-time news on natural gas and power market developments at http://intelligencepress.com. Additionally, the company, commonly identified by its flagship weekly newsletter, Natural Gas Intelligence or NGI, publishes natural gas infrastructure and storage maps. NGI also hosts GasMart, www.gasmart.com, now in its 20th year -- for the natural gas industry, and natural gas futures price workshops at NYMEX.

Source: Business Wire

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