Ferguson’s Forecast

By Published On: July 24, 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. The following data are from the U.S. Energy Information Administration.</i> Energy Circuit<i> takes no responsibility for the accuracy of this forecast.</i> USEIA reported yesterday that for the week ending July 16, gas in storage increased only 72 bcf, 10 bcf below my estimate. Despite last week?s monster storage report, gas prices did not drop far?slightly below $6/MMBtu. Prices jumped back above $6 yesterday within minutes of the storage report, closing at $6.15. Official statistics for the first months of 2004 indicate long-term gas production problems in the U.S. and Canada. Drilling activity is up more than 40% over last year, but production continues to decline. North American supplies are being maintained by imports of LNG, which have increased substantially this year. The four LNG import terminals serving North America are reaching maximum capacity, however. California consumer and environmental groups asked the California Public Utilities Commission to initiate an open public debate on the future of natural gas and LNG. A rigorous look at where we?re headed is long overdue. <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>June 25</td><td>1,938/td><td>+93</td><td>+87</td><td>1,940</td></tr><tr align=’center’><td>July 2</td><td>2,047</td><td>+109</td><td>+96</td><td>2,028</td></tr><tr align=’center’><td>July 9</td><td>2,155</td><td>+108</td><td>+75</td><td>2,109</td></tr><tr align=’center’><td>July 16</td><td>2,227</td><td>+72</td><td>+82</td><td>2,171</td></tr><tr align=’center’><td>July 23</td><td></td><td></td><td>+68</td><td>2,227</td></tr></table> * Historical averages may differ slightly from those reported by USEIA.

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