US gas market report

Feb 06, 2002 01:00 AM

Average US monthly natural gas spot prices for February fell 23.5 % from January, to $ 1.92/mm Btu -- 69.2 % below the $ 6.23/mm Btu average reached in February 2001.
In an exclusive survey by Inside FERC's Gas Market Report, whose spot price surveys set the benchmark prices for most monthly spot contracts in North America, the average price of natural gas delivered to the premium New York and New Jersey markets for February was $ 2.58/mm Btu compared with $ 4.92/mm Btu in January and $ 8.02/mm Btu in February 2001.

In Southern California, where the monthly average reached $ 12.51/mm Btu in February 2001, the average monthly spot price for February 2002 was just $ 2.02/mm Btu, down 22.9 % from $ 2.62/mm Btu in January. The February average is 83.9 % below the February 2001 level.
"The not-so-long days of this winter's market appear to be rapidly drawing to a close," said Kelley Doolan, natural gas market specialist for Platts and chief editor of Inside FERC's Gas Market Report. "Februaryis only the second month since April 1999 when the average US spot price has come in below $ 2.00/mm Btu. October was the other sub-$ 2.00 month, with an average of $ 1.68/mm Btu."
"Prices have fallen so far compared with last year," Doolan said, "because demand is lower due to mild weather and the economic slump, and because there is an unprecedented amount of gas left in storage facilities for this point in the heating season. Simply put: Lots of supply plus lower demand equals lower prices."

On Feb. 4, the average price for gas futures contracts for the coming 12 months -- an indication of the marketplace's price expectations -- was $ 2.504/mm Btu, down 2.5 % from the $ 2.569/mm Btu average on Jan. 4 and down 56.2 % from the $ 5.711/mm Btu average on Feb. 2, 2001, when price expectations were far more bullish than now.

Source: Platts
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