# Presentation: 272686

## NASEO Energy Outlook Conference

**February 26, 2001**
**John Cook**
**Energy Information Administration**

## Retail Product Prices Are Driven By Crude Oil

**Source: Retail - EIA; Spot - Reuters**

**Notes:**
Retail prices for both gasoline and diesel fuel have risen strongly over the past two years, driven mostly by the rise in world crude oil prices to their highest levels since the Persian Gulf War.

Of course, there are a number of other significant factors that impact retail product prices, the most important of which is the supply/demand balance for each product.  But the point of this slide is to show that generally speaking, as world crude oil prices rise and fall, so do retail product prices.

Because of the critical importance of crude oil price levels, my presentation today will look first at global oil supply and demand, and then at the factors that differentiate the markets for each product.

I’ll also talk briefly about natural gas, and the impact that gas prices are having on some petroleum products.

## WTI Crude Oil Price: Base Case and 95% Confidence Interval

***Projections***

**WTI Crude Oil Price: Base Case and 95% Confidence Interval**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
Spot WTI crude oil prices broke $35 and even $36 per barrel in November as anticipated boosts to world supply from OPEC and other sources did not show up in actual stocks data.  

The recent decline in prices seems to be more the result of an unraveling of speculative pressures than a change in underlying fundamentals.
Prices had been running higher than supply/demand fundamentals would have indicated throughout the fall months as a result of rising Mideast tensions, concern over the adequacy of distillate supplies, and expectations of Iraqi supply interruptions.
But Mideast tensions seemed to ease in December and the market appeared to perceive a quick return of Iraqi crude oil supplies at full capacity.  Pledges by Saudi Arabia/OPEC to offset a longer term Iraqi disruption added to a market sense of oversupply.
Relatively mild weather in Europe allowed distillate stocks to normalize there and has kept crude demand relatively stable.
All these factors seemed to refocus speculators on the downside potential for price, at least through December.

EIA still sees a  tenuous supply/demand balance.  Global inventories remain low, and need to recover to more adequate levels of forward demand coverage in order to avoid continued price volatility.  

However, EIA believes the market will move toward a more typical balance during  2001 and that prices will remain around $30 per barrel throughout the year, as inventories are expected to remain low.

## OPEC Crude Oil Production 1998-2001

**History**

**Projections**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
 EIA assumes in its base case that OPEC 10 production averages about 0.6 million barrels per day less in the 1st quarter of 2001 than was produced in the 4th quarter of 2000.  This is based on the assumption that beginning in February 2001, OPEC 10 production is 1 million barrels per day less than the estimate for December 2000.

From the fourth quarter of 1999 to the 4th quarter of 2000, worldwide oil production increased by about 3.8 million barrels per day to a level of 77.9 million barrels per day.

 After being sharply curtailed in December and January, EIA’s base case assumes that Iraqi oil exports return closer to more normal levels in February.  By the second half of 2001, EIA assumes Iraqi crude oil production reaches 3 million barrels per day, roughly the peak levels reached last year.

 EIA also assumes that after increasing by about 1.2 million barrels per day in 2000, non-OPEC crude oil production increases by about 0.6 million barrels per day in 2001.

## Annual World Oil Demand Growthby Region, 1991-2001

**Forecast**

**History**

*** Other includes Australia, New Zealand, the Middle East, and Africa.**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
  Following relatively small increases of 1.3 million barrels per day in 1999 and 0.9 million barrels per day in 2000, EIA is estimating world demand may grow by 1.6 million barrels per day in 2001.  Of this increase, about 3/5 comes from non-OECD countries, while U.S. oil demand growth represents more than half of the growth projected in OECD countries.

 Demand in Asia grew steadily during most of the 1990s, with 1991-1997 average growth per year at just above 0.8 million barrels per day.  However, in 1998, demand dropped by 0.3 million barrels per day as a result of the Asian economic crisis that year. Since 1998, annual growth in oil demand has rebounded, but has not yet reached the average growth seen during 1991-1997.

 In the Former Soviet Union, oil demand plummeted during most of the 1990s, with demand decreasing yearly by an average of 0.6 million barrels per day during 1991-1997. In the past few years, demand seems to have flattened, and 2001 is expected to continue this recent trend.

 Demand growth in Europe averaged 0.2 - 0.3 million barrels per day from 1991 through 1998.  However, oil demand growth dipped significantly in 1999 before showing a slight increase in 2000.  Oil demand in Europe is expected to grow in 2001 by an amount similar to that seen in the early to mid-1990s. 

 In the Americas, oil demand growth has continued to be strong throughout almost all of the last decade.  While there was little growth in 2000, oil demand in the Americas is expected to exhibit strong growth in 2001.

## Total OECD Oil Stocks*

***Total includes commercial and government stocks.**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
The most recent data show OECD inventories remaining at very low levels. 

 EIA expects inventories to remain low through the coming year.  This increases the potential for price volatility through the rest of the winter, and into the next gasoline season.

Inventories are a good measure of the supply/demand balance that affects prices.  A large over-supply (production greater than demand) will put downward pressure on prices, while under-supply will push prices upward.

As global oil production changed relative to demand, the world moved from a period of over-supply in 1998 to one of under-supply in 1999 and 2000.  

OECD inventories illustrate the changes in the world petroleum balance.  OECD inventories rose to high levels during 1997 and 1998 when production exceeded demand and prices dropped to around $10 per barrel in December 1998.  However, when demand exceeded production in 1999 and early 2000, inventories fell to low levels, and prices rose, averaging almost $35 per barrel (WTI) in November 2000.

## Fundamentals Explain High Crude Oil Prices

**Fundamentals Explain High Crude Oil Prices**

**Source: EIA and OECD**

**Notes:**
 One can use a simple model to deal with price/fundamental relationships.  This one predicts monthly average WTI price as a function of OECD total petroleum stock deviations from the normal levels .
The graph shows the model as it begins predicting prices in 1992.  It shows how well the model has predicted not only the direction, but the magnitude of prices over this 8+ year period.

 While the model is simple and not perfect, it does predict the overall trends and, in particular, the recent rise in prices. 

 It also shows that prices may have over-shot the fundamental balance for a while -- at least partially due to speculative concerns over Mideast tensions, winter supply adequacy, and Iraq’s export policies.

 Prices moved lower in December, and even undershot briefly the prediction based on market fundamentals.  This was due to the market’s perception of a rising probability of excess supplies restoring global inventories to normal levels, causing traders to disproportionately bid prices down from earlier, exaggerated levels.

 However, by late January/early February, following OPEC’s announcement that production quotas would be cut by 1.5 million barrels per day, the market’s expectation of excess supplies dissipated.  Currently, the WTI price is much closer to what EIA’s model would expect based on supply/demand fundamentals.  While the relationship between actual WTI prices and EIA’s model projection may diverge for any given month, the recent return of prices more in line with EIA’s model validates the notion that eventually, fundamentals will impact prices.

## Product Price Spreads Over Crude Oil Vary With Seasons and Supply/Demand Balance

**Source: Reuters**

**Notes:**
Of course, petroleum product prices don’t move in lockstep to crude oil prices, for a number of reasons.  We find it useful to look at variations in the spread between product and crude oil prices, in this case comparing spot market prices for each.

The difference between heating oil and crude oil spot prices tends to vary seasonally; that is, it’s generally higher in the winter, when demand for distillate fuels is higher due to heating requirements, and lower in the summer.  (Gasoline, as we’ll see later, generally does the opposite.)  However, other factors affecting supply and demand, including the relative severity of winter weather, can greatly distort these “typical” seasonal trends.

As seen on this chart, the winters of 1995-96 and 1996-97 featured seasonally larger heating oil spreads than the intervening summers.  Winter 1997-98 showed less variation, and winter 1998-99 seemed to almost reverse the seasonal norm, as mid-season heating oil spreads dropped as low as 1 cent per gallon.  Last winter, of course, was very different, as cold weather and tight supplies caused a spike in Northeast heating oil prices in late January through early February, yielding weekly average spreads of up to 60 cents per gallon.

This winter, we returned to a more typical pattern than either of the previous two heating seasons, though still with larger-than-typical heating oil spreads.  Low pre-season distillate inventories and early cold weather pushed spreads to 20 cents or more for most of the fall.  More recently, though, relatively mild temperatures in January and February have allowed inventories to remain stable, and let the spread fall back to about 7 cents.

## U.S. Distillate Inventories

**U.S. Distillate Inventories**

**Source: EIA**

**Notes:**
As of February 16, distillate fuel oil stocks were about 118 million barrels, which is almost identical to their 5-year average for this time of year, and 11 percent higher than a year ago.  Heating oil stocks were at 49 million barrels, or about 10 percent lower than their seasonal 5-year average, but 18 percent above last year.   

The stability of distillate stocks through the heart of this winter, when they usually decline, has virtually eliminated concerns about supply adequacy for the remainder of the heating season, and allowed heating oil and diesel fuel prices to fall recently.

## Distillate Stocks Are Important Part of East Coast Winter Supply

**Source: Energy Information Administration**

**Notes:**
Stocks are normally an important part of East Coast winter distillate supply, since they are the nearest source when anything unexpected occurs, and they supply a significant portion of demand during the peak heating season.  Over the last 10 years, stocks have provided about 15% of supply during the peak winter months of January and February.  On average, stocks supply the East Coast with about 260 thousand barrels per day in January and 280 in February.  Those supplies represent draws of about 8 million barrels in one month.  

In addition, East Coast refineries meet about 25% of demand during January and February, and other regions -- mostly the Gulf Coast -- supply 40-50% of the region’s needs.

Imports generally supply about as much as stocks during the peak months, with most of the product coming from Canada, the Virgin Islands and Venezuela.  During the peak months, product from more distant sources also helps to supply the region.

Thus, about 60% of the East Coast’s supply comes from distant sources, so if cold weather increases demand, re-supply from these distant sources can take several weeks.

Note, though, that these are only the typical shares of supply.  This winter, as we’ve noted, has been far from typical.Though we only have final data through December, the numbers suggest a tremendous difference from the norm.  Strong imports in December made up 23 percent of supply, nearly twice their normal share, while stockdraw only supplied 3 percent.

## Both Distillate Supply and Demand Reached Extraordinary Levels This Winter

**Source: EIA**

**Notes:**
This chart shows some critical differences in distillate supply and demand during this winter heating season, in comparison to the past two winters.

Typically, distillate demand peaks during the winter months, but “new supply” (refinery production and net imports) cannot increase as much, so the remaining supply needed is drawn from inventories.  This pattern is evident in each of the past two winter heating seasons.

This winter, however, the pattern was very different, for several reasons:

  With inventories entering the season at extremely low levels, a “typical” winter stockdraw would have been nearly impossible, particularly in the Northeast, the region most dependent on heating oil.

 Demand reached near-record levels in December, as colder-than-normal temperatures and extremely high natural gas prices pushed more “switchable” demand into distillates.

 Refinery production stayed relatively high, as low stocks of both gasoline and distillates prompted refiners to keep runs as high as possible.

 Imports, normally an important part of winter supply, took on an even greater role, thanks to the availability of substantial volumes from Europe, and particularly Russia.

## Heating Oil Imports Strong in 2001

**Source: EIA**

**Notes:**
Although total distillate imports have been unusually strong this winter, heating oil (high-sulfur distillate) imports have grown by a proportionately greater amount.

As this slide shows, estimated heating oil imports jumped to an estimated 330 thousand barrels per day in December, and nearly 430 thousand barrels per day in January, about twice the peak levels seen in the past several winters.

## Retail Heating Oil and Diesel Fuel Prices

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
 With the worst of the heating season (October-March) now behind us, we can be fairly confident that retail heating oil prices have seen their seasonal peak. Relatively mild weather and a softening of crude oil prices have helped ease heating oil prices. Spot heating oil prices recently reached their lowest levels in over six months. 

 Because of relatively balmy weather in the Northeast in January and February, heating oil stock levels have stabilized. Furthermore, heating oil production has been unusually robust, running several hundred thousand barrels per day over last year's pace.

Currently, EIA expects winter prices to average around $1.41, which is quite high in historical terms. The national average price in December 2000 was 44 cents per gallon above the December 1999 price. For February 2001, the average price is not expected to be much different from the record high of $1.42 per gallon set last February.

## 97-98

***Average Northeast Household Heating With Oil***

**97-98**

**98-99**

**99-00**

**00-01**

**Actual**

**Actual**

**Actual**

**Base Fcst.**

***Gal***

***636***

***650***

***644***

***715***

***$585***

***$520***

***$760***

***$994***

***$/gal***

***$0.92***

***$0.80***

***$1.18***

***$1.39***

***Cost ($)***

**Consumer Winter Heating Oil Costs**

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
The outlook for heating oil costs this winter, due to high crude oil costs and tight heating oil supplies, breaks down to an expected increase in heating expenditures for a typical oil-heated household of more than $200 this winter, the result of an 18% increase in the average price and an 11% increase in consumption.  The consumption increase is due to the colder than normal temperatures experienced so far this winter and our expectations of normal winter weather for the rest of this heating season.

Last winter, Northeast heating oil (and diesel fuel) markets experienced an extremely sharp spike in prices when a severe weather situation developed in late January.  It is virtually impossible to gauge the probability of a similar (or worse) price shock recurring this winter, and, as usual, we have omitted any such development from our base case.  But, while not necessarily likely, it is more likely than compared to almost any previous situation for this time of year.

## Propane Prices Influenced by Crude Oil and Natural Gas

**Propane Prices Influenced by Crude Oil and Natural Gas**

**Notes:**
 Propane prices have been high this year for several reasons.  Propane usually follows crude oil prices more closely than natural gas prices.  As crude oil prices rose beginning in 1999, propane has followed.

In addition, some early cold weather this year put extra pressure on prices.

However, more recently, the highly unusual surge in natural gas prices affected propane supply and drove propane prices up.

Propane comes from two sources of supply:  refineries and natural gas processing plants.  
The very high natural gas prices made it more economic for refineries to use the propane they normally produce and sell than to buy natural gas.
The gas processing plants found it more economic to leave propane in the natural gas streams than to extract it for sale separately.
While supply diminished, demand did not.  The net result was more pressure on propane prices, driving them up along with natural gas prices.

## U.S. Propane Total Stocks

**U.S. Propane Total Stocks**

**Source: Energy Information Administration**

**Notes:**
 U.S. inventories of propane benefited from a late pre-season build that pushed inventories to over 65 million barrels by early November 2000, the second highest peak pre-heating season level since 1986. 

 However, a large draw in U.S. inventories of propane in December put inventories at the bottom of the “normal” range.  U.S. propane inventories are expected to remain at or below the normal range for the duration of the 2000-01 heating season.    

As we look ahead, we will be watching how propane stocks recover this summer and fall in preparation for next winter.

## Retail Propane Prices

- Source:  EIA/State Heating Oil and Propane Program

**Notes:**
 Consistent with spot prices, residential propane prices have been higher all winter than during the past several years.  The recent surge is mainly the result of the surge in natural gas prices -- something that we have not seen to this degree before.

In January prices averaged about $1.66 per gallon, compared to last year’s $1.08 and the prior year’s very low $0.89.  

As with other heating fuels, the high prices for propane this winter have put a strain on many homeowners’ budgets.

## Gasoline Price Volatility Is a Concern This Summer

**Source: Reuters**

**Notes:**
Last summer’s low stocks and transition to Phase 2 RFG added price pressure over and above the already high crude price pressure on gasoline.  

As we ended last winter, gasoline inventories were low, and the spread between spot prices and crude oil were higher than typical as a result.  Inventories did not recover and the spread remained higher than average through most of the summer.  

In November and December, as gasoline demand eased, prices relaxed and spreads returned to average levels -- only to rebound again in January and February as refineries began to undergo maintenance and the market watched the already low stock cushion erode further.

This February, spreads are higher than last year -- averaging 14 cents so far.  This is about twice what we would typically see this time of year. 

## Low Stocks Mean Tight Markets

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
Like those for other petroleum products, gasoline inventories have been running below  normal.  As of  the latest weekly data, stocks are about 5% lower than the low end of the normal range for this time of year.  

Behind all of the low product inventories are low  crude oil inventories.  Recall that the crude market tightened in 1999 when OPEC cut back production.  Demand was greater than supply and inventories were used to make up the difference.  They have not yet recovered.    
Crude oil inventories are running about 7% below  the low end of the normal range for this time of year.  
After last week’s very large stock draw, it appears inventories are the lowest that they have been since December 1975.   

The U.S. inventory data will be an important price barometer to watch.   Low inventories leave little cushion to absorb unexpected events such as refinery or logistical disruptions.

## MTBE Prices Responded to Natural Gas Prices

**Source: Reuters, Platt’s**

**Notes:**
On top of the usual factors impacting gasoline prices, natural gas has had some influence recently.  MTBE is an oxygenate used in most of the RFG consumed in the U.S.  Generally, it follows gasoline prices and its own supply/demand balance factors.  

But this winter, we saw it respond strongly to natural gas prices. MTBE is made from methanol and isobutylene, which in turn come from methane and butane.  Both methane and butane come from natural gas streams.  Until this year, the price of natural gas has been so low  that it had little effect.  But the surge that occurred in December and January pulled MTBE up .  
Keep in mind that about 11% MTBE is used in a gallon of RFG, so a 30 cent increase in MTBE is only about a 3 cent increase in the price of RFG.

While we look ahead at this summer, natural gas prices should be lower, so we don’t expect natural gas to have the same influence as we saw in December and January.

However, last summer’s surge reminds us of the volatility tight markets engender.  Last summer, MTBE broke away from gasoline as high prices caused refiners to pull back form the spot market and live hand to mouth.  There may even have been some exports to Europe, as prices were high there as well.  In July, some plant problems kept prices up longer before they finally fell back in line with gasoline.

As we approach this summer, we expect to enter the summer with low inventories, increasing the chances of volatility.  The recent shutdown of the Blue Island refinery in Illinois adds an additional element of uncertainty to that region as we go through the turnaround.  We are not comfortable with how this summer is shaping up so far.

## Retail Motor Gasoline Prices*

- * Regular self-service

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
 Gasoline pump prices have backed down from the high prices experienced last summer and fall. The retail price for regular motor gasoline fell 11 cents per gallon from September to December.

 However, with crude oil prices rebounding somewhat from their December lows combined with lower than normal stock levels, we project that prices at the pump will rise modestly as the 2001 driving season begins this spring.  For the summer of 2001, we expect only a little difference from the average price of $1.50 per gallon seen during the previous driving season, as motor gasoline stocks going into the driving season are projected to be slightly less than they were last year.

 The situation of relatively low inventories for gasoline could set the stage for some regional imbalances in supply that could once again bring about significant price volatility in the U.S. gasoline market.

## Current Natural Gas Spot Prices: Well Above the Recent Price Range

**Notes:**
The surge in spot prices at the Henry Hub since April has taken prices well above a typical range for 1998-1999  (in this context, defined as the average,  +/- 2 standard deviations).

The upper bound on the typical range for 1998-99 is less than one-third of recent spot prices.

The Henry Hub spot price spiked at $10.53 per MMBtu on December 29.

Concerns over supply this winter drove prices up.  These concerns stemmed from:  
low drilling levels in 1998 and 1999 contributing to relatively flat production
increased demand for natural gas as the economy has grown, especially from the electricity generating sector
expectations for a colder winter than experienced in the last few years (generally borne out so far this heating season)
low levels of natural gas in storage

Natural gas spot prices have dropped in the past few weeks, with Henry Hub falling under $7 per MMBtu on January 24, and have remained under $6 since February 12.

## U.S. Natural Gas - Working Gas in Underground Storage

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**U.S. Natural Gas -**** Working Gas in Underground Storage**

**Notes:**
 Working gas in storage is estimated to have been about 1,250 billion cubic feet at the end of January, about one-third below the previous 5-year average.  The estimated end-year level for 2000 was the lowest for the period of time that EIA has records.

 The current outlook for winter demand and supply suggests that storage is likely to remain very low  for the remainder of this winter.  In the base case, we project that gas storage will fall to about 567 billion cubic feet at the end of the heating season (March 31, 2001).  The previous 30-year observed low was 758 billion cubic feet at the end of the winter of 1995-1996.

 If summer gas demand next year is as strong as we currently expect it to be, the low end-winter storage levels will present a strong challenge to the North American gas supply system to maintain flexibility and provide additional gas in preparation for the subsequent winter season.

## Natural Gas Spot Prices:Base Case and 95% Confidence Interval 

**Sources: History: Natural Gas Week; **
**Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
 Spot wellhead prices last summer averaged well over $4.00 per thousand cubic feet during a normally low-price season.  During the fall, these prices stayed above $5.00 per thousand cubic feet, more than double the year-ago average price.  In January, the spot wellhead price averaged a record $8.98 per thousand cubic feet.  Spot prices at the wellhead have never been this high for such a prolonged period.

 The chief reason for these sustained high gas prices was, and still is, uneasiness about the supply situation.  Concern about the adequacy of winter supplies loomed throughout most of the summer and fall as storage levels remained significantly depressed.  Last December, the most severe assumptions about low storage levels became real, when the spot price closed for the day at over $10.00 per cubic feet on several occasions.  

 The low levels of gas storage have put the spot market in an extremely volatile position.    However, heating demand was eased by milder than normal weather during the latter part of January in much of the  nation's gas consuming regions.  This in turn led to spot prices plunging to less than $6.00 per thousand cubic feet.   Nevertheless, spot prices and wellhead prices still remain quite high by historical standards.  

The current forecast has prices dropping to $4.28 per MCF on average for the summer (versus $6.48 over this past winter).  While this is over a $2 decline from winter, it is similar to last summer’s high prices.

## Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.

**Sources: History:  EIA;  Projections: Short-Term Energy Outlook, February 2001.**

**Notes:**
 Mild weather minimized residential gas consumption over most of the past 3 winters.  Our projections for more or less normal winter weather through the remainder of the season this year mean about 18 percent greater demand this winter compared to last year.

 The combination of higher consumer prices and demand increases expected under normal weather suggests an increase in gas home heating costs of nearly 80 percent this winter.  Our projections imply natural gas customers would be expected to pay over $410 more this winter than last year. 

## What to Watch:  Iraq, OPEC andStocks, Stocks, Stocks

**Crude Oil:**** Iraq, OPEC, and World Economy**
**Distillate:**** End of Winter Stocks, Peak November Stocks, Crude Oil Prices**
**Propane:**** End of Winter Stocks, Peak October Stocks, Crude Oil Prices, Natural Gas Prices**
**Gasoline:**** May Inventories, Rapid Inventory Draws, Crude Oil Prices**
**Natural Gas:**** March Storage, Summer Build Rates (temperature)**

**Notes:**
When keeping an eye on petroleum prices, we watch inventories closely.  Recall that inventories measure the balance between supply and demand, and thus signal pressure on stocks.
For crude oil, world petroleum inventories are low, and Iraq is probably the largest wild card that could impact prices in the short term.  While OPEC will continue to adjust production to support the price of crude oil, the world economy may work against the organization.  A slower economy means lower demand, and more OPEC production cutbacks to support prices.
We are almost through this winter, so for distillate and propane, we will be watching how  low  stocks are at the end of the winter, which will indicate how much extra build is needed to start next winter in good shape.  Crude oil prices impact both distillate and propane prices, but the high natural gas prices have had some unusual impacts this year on propane supply.   We will be watching the impact of natural gas prices on the propane build this coming summer and fall.
Now  is the time to begin watching gasoline more closely.  Stocks are being drawn down as refineries undergo maintenance, but will build back up through May to be used during the summer.  We watch the May inventory levels to measure how “tight” our summer is likely to be.  Right now, lower than normal stock levels do not bode well, but large margins could draw unusual imports, as we saw  with distillate.
Finally, given the very low  current storage levels, natural gas suppliers may have to struggle to build inventories back before winter to more normal levels.  It will be important to watch where inventories finally bottom out and the subsequent build rates.  Temperatures this summer will influence demand for natural gas.  If demand is low, the build rate could be higher than usual.