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Crude oil prices up strongly; Henry Hub spot gas hits $3.59 MMBtu
Petroleum News Alaska Staff
The Energy Information Administration expects crude oil prices to stay up — averaging above $20 a barrel through the end of 2003 — but expects natural gas prices to drop back down around $2.50 a million Btu by summer.
Average crude oil prices moved up strongly in March, the EIA said April 9 in its short-term forecast, rising nearly $4 from the average February level to $24.50 per barrel for West Texas Intermediate.
The agency credited the elevation of near-term prices some $2 a barrel above previous expectations to Organization of Petroleum Exporting Countries production discipline, a growing sense in the market that economic growth may accelerate more rapidly than previously thought and continued uncertainty caused by tensions in the Middle East.
The EIA’s February projection March WTI was $22.80 a barrel.
The agency said it expects WTI prices to be generally above $20 a barrel through the end of 2003, although there is uncertainty about non-OPEC production response, worldwide economic strength and other factors. Gas price expected to fall In spite of a large domestic current excess supply of natural gas, the EIA said, “spot and near-term futures prices for natural gas have moved up sharply in the recent weeks.”
The Henry Hub spot natural gas price hit $3.59 per million Btu March 26 and the estimated March monthly average spot price at the Henry Hub was $3.03 per MMBtu — about 70 cents per MMBtu above the February price.
The EIA said it believes the price rise is temporary and expects to see it move back down toward $2.50 per MMBtu once the summer season starts.
Factors causing the price run up include uncertainties about the strength of the domestic economic recovery, the potential for further tightening or even disruption in the worldwide oil market, increasing use of gas as fuel for new gas-fired electric generating plants added over last two years and continuing to come on line and possible impact of decline in gas-directed drilling in the United States since July 2001.
Factors expected to bring the gas price back down include: excess natural gas in storage and the existence of significant excess natural gas production capacity.
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