US natural gas to average $6.65/Mcf in 2005: Raymond James

Washington (Platts)--7Sep2004

Despite the current slackening of US natural gas prices, 2005 gas prices are
likely to average $6.65/Mcf, according to Raymond James' senior energy analyst
Tuesday. The prediction compares with Marshall Adkins' last forecast of
$6.25/Mcf. 

He said current soft prices were directly related to low, weather
driven demand but "the underlying, non-weather fundamentals for natural gas
remain extremely bullish." He forecast that bearish plays would retreat
towards the end of 2004 and gas prices return to a 5.5 to 1 ratio with crude
oil. Adkins forecast a $40/bbl average West Texas Intermediate price in 2005,
implying low $7/Mcf natural gas prices. While storage numbers were strong,
"the combination of falling gas supplies, a strong US economy, and favorable
fuel-switching ratios are going to eventually put significant pressure on the
US gas storage system," he said. Adkins believes that when traders are
comfortable with the supply/demand balance, gas will trade below the 5.5 to 1
midpoint, but bounce above that mark when weather-related demand increases.

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