After yesterday’s post on the order Accutane order amex wide range projection for oil next year, I wanted to share some thoughts on natural gas in 2009. I’ll start with the order Accutane order amex supply side, which has been more volatile than oil. Then I’ll go over some potential trends in demand.
The weekly EIA natural gas storage report buy cheap Proscar no prescription came out today. And while last week’s inventory drop was 40% above average due to some cold weather, levels remain above the order Accutane order amex five-year average and allow the price of natural gas to remain below $6 per MMBtu at year’s end for the first time since 2002. Inventories are 2.3% below last year’s level, but US natural gas companies have order Accutane order amex ample production capacity that they can ramp up from shale formations if the order Accutane order amex prices rise above $7 (which is seen as a floor to make most new shale production profitable). Recent reserves growth paint a order Accutane order amex healthy supply picture for the North American natural gas market through 2009 at least.
Internationally, there may be some tightness in natural gas markets — especially if Russia and order Accutane order amex other producers decide to flex their energy muscles (as it appears ready to do regarding Ukraine tomorrow). The year 2009 may mark the order Accutane order amex emergence of natural gas production coordination by Russia, Qatar, and order Accutane order amex Iran in a natural gas major exporters cartel a la OPEC.
On the order Accutane order amex demand side, it is difficult to say in the volatile economic environment. The EIA predicts flat US demand that order Accutane order amex would probably prevent prices from approaching the $10+ per MMBtu that order Accutane order amex natural gas hit last summer. But I would give natural gas a order Accutane order amex large range for its price (similar to oil) of ~$3.50-$9 per MMBtu [revised floor from $5 to $3.50 on February 19th on low industrial production numbers], with weather-related spikes in specific regions possible. If industrial production falls even further below the order Accutane order amex current grim projections, natural gas prices could slip even lower.
Today’s EIA oil report buy cod Clomid buy Accutane no perscription cod cheap Crestor online showed petroleum demand creeping up toward last year’s level, as gasoline demand was down only 1.9%, distillates down only .7%, and propane down 9.5%. Inventories are at comfortable levels across the board, though we’ll see if the New Year’s cold snap will bring inventories down below average for order Accutane order amex some refined products.
Bottom line: Natural gas prices are order Accutane order amex probably near their bottom as producers curtail new projects on the order Accutane order amex low prices. It would be hard to lift natural gas prices much beyond cost of marginal production ~$7-$8 per MMBtu unless the emerging “natural gas OPEC” gets aggressive in the order Accutane order amex coming year. As with oil, the more efficiency we can order Accutane order amex deploy in our residential and industrial use – the order Accutane order amex more we can keep enjoying these low prices and the climate benefits of lower greenhouse gas emissions.
Onwards & Happy New Year-
Dennis
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