Ferguson’s Forecast

By Published On: July 12, 2004

<i>Storage is the main price driver for natural gas. Storage also provides the most current and accurate snapshot of the natural gas market’s supply and demand. On a trial basis, </i>California Energy Circuit <i>will publish national gas storage data reported by the U.S. Energy Information Administration. We will also include the estimate of the author, Dr. Rich Ferguson, Center for Energy Efficiency and Renewable Technologies research director, of the following week?s storage level. This publication takes no responsibility for the estimates? accuracy.</i> <b>Comments:</b> Continued spring weather kept heating and cooling demand low last week, resulting in another sizable build in storage. Additions were somewhat below expectations, continuing a general trend since the beginning of the year that may reflect a worrisome decline in gas production, which some experts expect. Or it may reflect an increase in demand for manufacturing, or some combination of the two. Despite storage levels near the historical average, natural gas prices remained well above $6/MMBtu all week, closing yesterday at $6.32. Higher energy prices were also reflected in the price of crude oil, which remained above $40/barrel, closing yesterday at $40.92. Although coal is generally purchased through long-term contracts, USEIA reports that spot prices for coal are also increasing. <table cellspacing= 1 cellpadding = 1 border=1><tr align=’center’><th colspan=’5′><b>U.S. Natural Gas Storage</b> (in billion cubic feet)</th></tr> <tr align=’center’><td>Date (2004)</td><td>Stocks*</td><td>Change from prior week</td><td>Forecast change</td><td>Prior 5-year average stocks**</td></tr> <tr align=’center’><td>April 23</td><td>1,155</td><td>+78</td><td>+110</td><td>1,194</td></tr><tr align=’center’><td>April 30</td><td>1,227</td><td>+72</td><td>+71</td><td>1,268</td></tr><tr align=’center’><td>May 7</td><td>1,303</td><td>+76</td><td>+70</td><td>1,340</td></tr><tr align=’center’><td>May 14</td><td>1,388</td><td>+85</td><td>+101</td><td>1,418</td></tr><tr align=’center’><td>May 21</td><td></td><td></td><td>+89</td><td>1,493</td></tr></table> * Gas in storage as reported by USEIA on the following Thursday. ** Historical averages may differ slightly from those reported by USEIA.

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